US prosecutors are reportedly preparing a potential fraud charge against disgraced crypto tycoon Sam Bankman-Fried, and speculation is growing that his ex-girlfriend Caroline Ellison may be involved.
According to Bloomberg News, officials with the Department of Justice in the Southern District of New York are investigating allegations that hundreds of millions of dollars were transferred from the United States to the Bahamas as the FTX cryptocurrency exchange filed for Chapter 11 bankruptcy protection.
According to previous reports, federal prosecutors in Manhattan are also investigating whether Bankman-Fried manipulated cryptocurrency markets by orchestrating the trades that led to the collapse of the TerraUSD cryptocurrency earlier this year.
Meanwhile, Ellison, former CEO of FTX’s sister hedge fund Alameda Research, According to information, he was seen drinking coffee at the Soho restaurant in Manhattan Bloomberg also reported last week — and hired Stephanie Avakian, a partner at white-shoe law firm Wilmer Hale, who is a former chief of enforcement at the Securities and Exchange Commission.
The Post has reached out to Wilmer Hale for comment.
Although Bankman-Fried has given several interviews and posted frequently on social media in recent weeks, Ellison has remained silent, leading some observers to believe that she wants to cooperate with authorities.
Last month, Bankman-Fried gave a wild, wide-ranging interview in which she blamed the FTX collapse on Ellison, 28, a “Harry Potter” fan who tweeted about taking amphetamines. Bankman-Fried insisted in an interview with Vox reporter Kelsey Piper that her claim that FTX “does not invest in client assets” is “factually accurate” because Alameda Research, not FTX, is making the investments.
Bankman-Fried and Ellison were reportedly part of a group of 10 roommates who oversaw FTX and Alameda operations from a penthouse in the Bahamas. The group was said to be romantically involved, with some online speculation suggesting that they had a network of “policula” or polyamorous relationships.
FTX is said to have used billions of dollars in client funds to pay off debts incurred by Alameda Research, setting off the chain of events that led to its implosion last month. On November 11, several cryptocurrency watchers noticed that $663 million was suspiciously transferred from digital wallets managed by FTX to a fund managed by Bahamian authorities.
The Bahamas Securities Commission said in a statement on Nov. 17 that it ordered the money to be transferred to its digital wallet “for safekeeping.”
Investigators are also looking into whether FTX engaged in criminal behavior by using client funds to pay off the debts of Alameda Research, a sister analyst firm founded by Bankman-Fried, Bloomberg News reported.
Mark Cohen, a lawyer for Bankman-Fried, and Mark Botnick, a spokesman for Bankman-Fried, both declined to comment.
Bankman-Fried has denied knowingly cheating in recent media interviews.
Bankman-Fried said FTX was responsible for the collapse and failed to realize the amount of risk FTX and Alameda, based in the Bahamas, were taking on both ventures.
One of the charges against Bankman-Fried is that she arranged for Alameda to use clients’ assets in FTX to place bets on the market. Bankman-Fried said in public interviews that she did not “knowingly” commingle clients’ assets with Alameda.
“I didn’t know exactly what was going on,” Bankman-Fried said at the New York Times DealBook Summit last month.
“I learned a lot while these things were going on.”
Bankman-Fried tweeted last week that she was willing to testify before Congress on Tuesday, but that she would be limited in what she could say and “wouldn’t be as helpful as she wanted to be.”
The tweet came in response to several tweets from House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) earlier this month, who demanded that Bankman-Fried appear at a hearing Tuesday on the FTX collapse.
Waters said A series of tweets to Bankman-Fried Based on numerous media interviews since the collapse of the FTX, “it was clear to us that the information you have received so far is sufficient for testimony.”
FTX, the cryptocurrency version of a bank, suffered a setback last month when clients tried to suddenly withdraw their assets due to growing doubts about the financial strength of the company and Alameda Research.
Since the collapse, the new management of FTX has called the management of the cryptocurrency exchange “a complete failure of corporate control”.
In a series of tweets to Waters, Bankman-Fried listed specific issues she might discuss with the committee, including the solvency of FTX’s U.S. business, its American clients and possible solutions for returning assets to international clients.
He also said he could talk about what he thought caused the accident and “my own failings”.
In a television interview just 10 days ago, Bankman-Fried said he believed the US branch of FTX was fully solvent and could begin the withdrawal process immediately.
As for the rest of FTX, which is significantly larger than the US unit, he said the fate of clients’ funds was largely outside his control.
Once one of the world’s richest men on paper, Bankman-Fried now says he gets by on a single credit card and has less than $100,000 to his name since the FTX failure.
With post wires