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FTX creditors include NYT, WSJ, Meta and Binance as Justice probes SBF's $400 million Modulo deal

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(Kitco News) - FTX is making waves again, as the bankrupt crypto exchange released the complete list of its creditors late yesterday, and the government investigates the firm’s massive $400 million investment in an unknown startup right before its implosion.

On Jan. 25, lawyers for FTX filed the complete list of all creditors owed money by the crypto exchange with the United States Bankruptcy Court for the District of Delaware. The document is 115 pages long and lists every creditor, large and small, in alphabetical order. The list does not include the names of FTX’s 9,693,985 customers whose accounts were frozen, as the court ruled they could be kept confidential.

Not surprisingly, many of the biggest names in the cryptosphere were represented, such as Coinbase, Binance, Messari, BlockFi, Chainalysis and Galaxy Digital. There appears to be a fair amount of duplication in the records, however, as Binance Capital Management and Coinbase are each listed seven times.

Among the most notable names from the corporate world are financial services firms Ernst & Young and Deloitte, Wall Street’s Goldman Sachs, JP Morgan and Cantor Fitzgerald, and media mainstays The New York Times and The Wall Street Journal, both of which drew criticism for what was perceived as kid-gloves treatment in their coverage of FTX founder Sam Bankman-Fried as his empire unraveled.

Virtually all the tech giants were listed as creditors, including Google, Apple, Amazon, Meta, Microsoft and Twitter.

Government agencies included the Internal Revenue Service (IRS), Japan’s Financial Services Agency and the Financial Crimes Enforcement Network, a division of the United States Treasury Department tasked with combating “domestic and international money laundering, terrorist financing, and other financial crimes.”

Crypto lobbying organizations listed in the filing included the Crypto Council for Innovation and Blockchain Australia.

The filing did not list the amount each creditor is owed or the nature of the business relationship between them and FTX.

Meanwhile, the New York Times reported that the U.S. Justice department and FTX’s new management are focusing on a series of massive transfers of funds made by the exchange to an upstart venture capital firm with personal ties to Bankman-Fried.

According to the report, right before the collapse of FTX and sister hedge fund Alameda Research in November, SBF appeared to do a little hedging of his own, sending $400 million to a brand-new crypto company called Modulo Capital.

The Modulo Capital story echoes themes that run through all of Bankman-Fried’s business dealings, where personal relationships result in very senior roles for relatively inexperienced people.

As Alameda was being run into the ground by SBF’s former romantic partner and Jane Street colleague Caroline Ellison, Modulo was formed in March of 2022 by former Jane Street colleagues Duncan Rheingans-Yoo, who had graduated from university just two years prior, and Xiaoyun (Lily) Zhang, who multiple sources claim had also been romantically involved with Bankman-Fried.

The new firm was also created and run out of the Albany residential compound that housed FTX and Alameda, along with SBF and Ellison. Zhang and Rheingans-Yoo were Modulo’s only directors, according to its Bahamian incorporation papers, and Zhang and Bankman-Fried remained friends and would “sometimes travel together on charter flights to New York from the Bahamas.”

The report noted that the Modulo investment was a point of contention among SBF’s inner circle, with Ellison expressing “reservations” about the arrangement.

Bankman-Fried’s decision to invest $400 million, one of his single largest investments, in a start-up firm as Alameda was tanking “raised suspicions for investigators,” and they suspect the funds came from customer accounts.

Neither Rheingans-Yoo or Zhang have been accused of wrongdoing at this time, but they have hired Aitan Goelman, a criminal defense lawyer and former director of enforcement for the Commodity Futures Trading Commission.

FTX’s lawyers have also highlighted the $400 million transfer to Modulo as “one of its prime targets for reclaiming money,” and it featured in a slide presentation filed with the Delaware court last week.

According to the presentation, Modulo “received funds in installments in the third and fourth quarters of last year,” with approximately $300 million transferred just before FTX and Alameda went bankrupt.

“Focusing on large, questionable transactions to a fund, company or a person with close connections to the debtor before the bankruptcy filing is basically the low-hanging fruit in a bankruptcy case,” said University of Georgia School of Law professor Lindsey Simon in the report.

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