March 22, 2023

A disturbing new element has entered the colossal FTX file, of which we no longer seem to see the end. US authorities are investigating a company called Modulo Capital which allegedly received more than $400 million from Sam Bnakman-Fried, and which, however, has no known activity to date. But above all, does this colossal sum come from the funds of the customers of the exchange?

A mysterious company interests the investigators

Last December, the name of Modulo Capital was briefly mentioned following the bankruptcy of the FTX cryptocurrency exchange. We then learned that this company, very little known to the general public, yet maintained very close ties with Sam Bankman-Fried and his close professional circle, especially Caroline Ellison.

Founded in March 2022Modulo Capital is a relatively young company, but which would have already ended almost all of its activities, given recent information.

According to the New York Times, we can find the name of Xiaoyun Zhang among the founders of the company, a woman who reportedly had a romantic relationship with Sam Bankman-Fried. We can also discover the name of Duncan Rheingans-Yoo, a recent Harvard graduate who would have participated in the creation of the company just 2 years after leaving the prestigious Cambridge school.

The 2 accomplices both worked within the financial company Jane Street, where they had the opportunity to rub shoulders with Sam Bankman-Fried.

But if this obscure company attracts attention today, it is concerning its multiple dubious financings. In total, the investment fund of FTX and Alameda Research have both invested over $400 million in the company since its recent inception.

So why did such a little-known company benefit from such financial support, and where did all this money come from?

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Have funds from FTX clients been used to fund Modulo Capital?

In an effort to raise as much money as possible to repay FTX’s huge number of creditors, the exchange’s new management is going through a fine-tooth comb the smallest companies having received near or far money from the empire built by Sam Bankman-Fried.

The various prosecutors in charge of the heavy FTX file revealed that they were very interested in the assets of Modulo Capital, the company having benefited from one of the largest investments by SBF in a context that is nevertheless very unfavorable to the cryptocurrency market.

Today, the question is how to determine what happened to the 400 million dollars, and above all, if they come from FTX client funds. Manhattan prosecutors, relying on an affidavit from SBF when he was released on bail, think the money was transferred in an unauthorized way.

Even more troubling, of that $400 million, three-quarters of the sum was reportedly paid shortly before FTX collapsed. In accordance with US law, as the installments were made shortly before the exchange went bankrupt, these financial transactions could be canceled.

It would also seem that Caroline Ellison, the former CEO of Alameda Research, was opposed to these payments, and that it was Sam Bankman-Fried who would have more or less forced things. An element that could play against him, Caroline Ellison having agreed to help the authorities in their investigation.

Given the darkness that reigns around this case, it is very likely that justice will report new revelations in the near future. Modulo Capital is now, according to the court, a central element in the investigation which relates to FTX.

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Source : New York Times

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