FTX's Own Executive Tipped Off Bahamian Regulators to Possible Fraud

Ryan Salame served as co-CEO of FTX Digital Markets in the Bahamas.

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Sam Bankman-Fried was arrested in the Bahamas earlier this week and was denied bail after being deemed a flight risk.
Sam Bankman-Fried was arrested in the Bahamas earlier this week and was denied bail after being deemed a flight risk.
Image: Tom Williams (AP)

As the news of FTX’s collapse keeps rolling in, the twists keep coming. We’re now learning that one of the once wildly popular cryptocurrency exchange’s executives—Ryan Salame—turned on the company by tipping off Bahamian regulators about the potential of fraud according to recently unsealed court documents.

A report from Financial Times indicates that the company’s own Ryan Salame, who served as FTX Digital Markets co-chief executive officer, was the one to initially blow the whistle on the exchange’s shady dealings. Salame allegedly told island regulators on November 9 that client assets were being held at Alameda Research to cover financial losses, according to unsealed court documents cited by Financial Times. A letter to Clayton Fernander—Commissioner of Police for the Royal Bahamas Police Force—from Christina Rolle, who is the Executive Director of the Securities Commission, read:

Regrettably, the Commission was informed today by Mr. Ryan Salame (“Mr. Salame”) who is the Chairman of FTX Digital that clients’ assets which may have been held with FTX Digital were transferred to Alameda Research (“Alameda”). Alameda and FTX Digital are related companies, specifically, Mr. Samuel Bankman-Fried is a founder of both FTX Digital and Alameda.

The Commission understood Mr. Salame as advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital. Put simply, that such transfers were not allowed and therefore may constitute misappropriation, theft, fraud or some other crime

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The letter further details that Salame claimed that only three people had the credentials to transfer client funds between FTX and Alameda—one of whom was Sam Bankman-Fried.

Bankman-Fried was arrested earlier this week in the Bahamas at the request of the U.S. on eight criminal counts, which include wire fraud regarding both FTX customers and investors in the exchange and Alameda, money laundering, and securities fraud conspiracy. Bankman-Fried was subsequently denied bail after being deemed a flight risk. Court-appointed FTX CEO John Ray III said called the company’s collapse “an utter failure of corporate controls at every level of an organization” in recent House testimony.