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Alameda Wallets Spark Controversy with Million-Dollar Crypto Transfers: Report

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Wallets linked to the bankrupt Alameda Research recently sparked concern in the crypto community after transferring millions worth of FTX Tokens on February 7th, according to a report.

The wallets’ activity post-FTX bankruptcy filing has raised questions about the effectiveness of law enforcement agencies and access to these wallets.

An address belonging to Alameda, named “brokenfish.eth”, recently transferred a large amount of FTT tokens, valued at almost $2 million, from the BentoBox smart contract on SushiSwap. The BentoBox contract acts as the main vault for the Sushi platform, and Sam Bankman-Fried, the former CEO of FTX, has a connection to SushiSwap that dates back to 2020.

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Source:  Etherscan

“Alameda Research 4” wallet, on the other hand, bought over 1 million FTT (worth approximately $2.3 million) in the $1.86-$1.87 range and also opened a loan position on Abracadabra. 

However, as per the report, it is widely speculated that the transfer of funds is connected to the ongoing bankruptcy proceedings and sanctioned by John Ray III, who serves as the court-appointed CEO of FTX. Ray III has stated his intention to seize control of the exchange’s assets and its subsidiary companies in order to repay debts.

The Alameda MAPS Token Deployer Wakes Up

Data analyst Arkham also reported that the Alameda MAPS Token Deployer on Ethereum received over $600K worth of tokens from Solana, which were then sent to an FTX holding address for safe storage after the November 11th hack.

Additionally, “Alameda Consolidation” also received $13 million worth of crypto assets from three different wallets on February 2nd. Blockchain security firm PeckShield alerted via a tweet about this transfer.

One of the wallets was owned by crypto exchange Bitfinex and transferred approximately $8.5 million in Tether and Ether. The other two wallets, from unidentified individuals, transferred approximately $6 million in USD Coin to the “Alameda Consolidation” address.

The recent activity of Alameda-linked wallets has once again highlighted the need for stronger regulations in the crypto industry. The crypto community continues to closely monitor these developments and the impact they may have on the future of the industry.

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For FTX & Alameda Ties Silvergate Under Criminal Investigation: Report

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The US Justice Department’s fraud unit has launched a criminal investigation into Silvergate Capital Corp’s connection to fallen crypto giants FTX and Alameda Research, according to a February 2nd report.

The person who was familiar with the matter claimed that the investigation is focused on Silvergate’s hosting of accounts tied to Sam Bankman-Fried’s businesses.

Silvergate, a La Jolla, California-based crypto-friendly bank, has not been accused of any wrongdoing, but the inquiry is drawing attention from lawmakers. 

The probe, which started in recent weeks, is looking into the bank’s knowledge of Bankman-Fried’s allegedly fraudulent activities that led to the downfall of the crypto exchange FTX.

Examining Silvergate’s Role in FTX Debacle

The probe delves into a crucial aspect of the FTX collapse, exploring the knowledge of banks and intermediaries associated with SBF’s companies regarding the supposed prolonged fraudulent scheme aimed at deceiving investors and clients. 

The former CEO of FTX and key associates have been charged with redirecting billions of dollars of the exchange customer assets to Alameda.

Silvergate is subject to annual exams by the Federal Reserve and independent audits and has previously stated that working with digital-currency companies can pose regulatory risks. 

However, the bank’s work with Bankman-Fried’s firms has drawn significant scrutiny from lawmakers. According to the report, a bipartisan group of senators sent a letter to the bank asking for answers on FTX’s alleged misuse of customer funds and expressing their dissatisfaction with the bank’s previous answers.

Silvergate representative stated that the bank has a comprehensive compliance and risk management program and conducted significant due diligence on SBF’s both companies. 

Additionally, Silvergate Bank is facing a lawsuit from investors alleging securities fraud due to a lack of transparency in its financial controls. 

The report also reveals that the bank’s shares experienced a 20% decline in after-hours trading, despite a 29% increase during regular market hours, as it is among several crypto-friendly banks relying on the Federal Home Loan Bank program to maintain liquidity. 

Despite a $1 billion loss in the last quarter and significant staff cuts, the bank reported $4.3 billion in Federal Home Loan Bank advances and approximately $4.6 billion in cash and cash equivalents as of the end of 2022.

Related Reading |  SBF’s Bail Plea Conditions Under Negotiation

FTX Former CEO Attempts To Influence Witness In Fraud Case: Report

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Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, has been accused by federal prosecutors of trying to contact a potential witness in his ongoing criminal case, according to the January 27th report.

The U.S. attorney’s office for the Southern District of New York revealed in a court document that SBF communicated with the general counsel of the U.S. division of FTX using both email and the encrypted messaging service Signal.

Sam Bankman-Fried has been accused of committing fraud, money laundering, and violating campaign finance laws in relation to the downfall of FTX in the previous year. 

SBF wrote to the general counsel of FTX U.S. On January 15th that he would:

really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.

The filing stated that the communication seemed to indicate an attempt to sway the testimony of Witness-1, particularly worrying as the defendant is aware that Witness-1 has information that could implicate them.

The prosecutors have requested Judge Lewis A. Kaplan, who is responsible for handling SBF’s case, for forbidding him from communicating with current or former FTX staff or utilizing Signal or any other encrypted messaging applications.

In the court filing, prosecutors said SBF’s use of Signal could obstruct their efforts to determine whether he tried to contact more potential witnesses during his confinement.

The proposed bail conditions in combination would more effectively prevent the defendant from obstructing justice.

FTX Ex-Bankman-Fried’s Past Use of Encryption

For much of his tenure at FTX, SBF relied on Signal, allowing people to delete messages automatically. According to prosecutors, he also directed FTX and Alameda Research employees to set their communications to disappear automatically after 30 days or less.

The filing said:

The autodeletion of FTX and Alameda’s Slack and Signal communications has impeded the government’s investigation. Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted.

This latest development in the case highlights the challenges investigators face when trying to track down digital evidence in cases involving cryptocurrency and encryption. 

As the use of digital currencies and encrypted messaging apps continues to grow, it is likely that we will see more instances of defendants using these tools to obstruct justice.

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$50M Frozen: Federal Prosecutors Target FTX Sam Bankman-Fried’s Farmington State Bank

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The Federal prosecutors have reportedly seized nearly $50 million of Sam Bankman-Fried, former CEO of FTX, from the account of Farmington State Bank, a small institution based in the tiny town of Farmington, Washington, according to a January 23rd report.

The bank, which had previously been known for its specialization in agricultural loans to farmers, had been acquired by Alameda Research, a trading firm owned by Sam Bankman-Fried, for $11.5 million just last year.

However, it appears that the bank’s association with Bankman-Fried has now led to its undoing, as prosecutors have seized the funds as part of an effort to track down nearly $700 million worth of assets for forfeiture. SBF of FTX himself has pleaded not guilty to eight charges of fraud and is scheduled to face trial in October.

It’s worth noting that Farmington State Bank was a relatively unknown entity before SBF’s acquisition. With just three employees and no online banking or credit card services, it was the 26th-smallest bank in the US out of around 4,800. 

The bank did rebrand itself as “Moonstone Bank” just before Alameda’s investment, and its website suggested that it wanted to “support the evolution of next-generation finance,” but it didn’t mention cryptocurrency specifically.

It remains to be seen how this development will impact Alameda Research and Deltec International Group, the parent company of Farmington State Bank, which had reportedly received a $50 million loan from FTX. The situation is certainly one to keep an eye on as it unfolds.

BlockFi’s Billion-Dollar Ties To FTX 

BlockFi, the once high-flying crypto lender, has been revealed to have had over $1.2 billion in assets tied up with Sam Bankman-Fried’s FTX and Alameda Research, according to mistakenly uploaded financials. 

The company filed for bankruptcy protection in late November and had greater exposure to FTX. The unredacted BlockFi filing shows $415.9 million worth of assets linked to FTX and $831.3 million in loans to Alameda as of January 14th. 

Bankman-Fried’s firms were wrapped in FTX’s November bankruptcy, which reeled the crypto markets. Lawyers for BlockFi had previously stated that the loan to Alameda was valued at $671 million, with an additional $355 million in digital assets frozen on the FTX platform. 

However, the financial presentation was assembled by M3 Partners, an advisor to the creditor committee, and is entirely composed of BlockFi clients who are owed money by the bankrupt lender.

Mystery Alameda Research’s Transfer Of Over $9 Million Worth FTT Token

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Whale Alert has reported a massive transfer of funds from cryptocurrency trading firm Alameda Research to an unknown wallet. The transfer, which occurred on January 18th, involved a staggering 5,002,584 FTT, equivalent to approximately $9 million.

The news of the transfer has sent waves throughout the crypto community, as Alameda Research has been at the center of controversy in recent months. The company was implicated in the SBF historical fraud scandal, which has shaken the industry to its core.

Many are now questioning the legitimacy of the transfer and speculating about the identity of the unknown Wallet. Some have suggested that the funds may be tied to the ongoing investigation into the SBF fraud, while others have speculated that they may be connected to a larger financial scandal.

This incident has raised many eyebrows in the crypto community, and it will be interesting to see how this unfolds and what the outcome will be. However, more information is expected to be released in the coming days and weeks as the investigation into the transfer may be unveiled.

Caroline Ellison, a former top executive at a trading firm closely tied to FTX, has pleaded guilty to criminal charges stemming from the collapse of the cryptocurrency exchange and apologized for defrauding customers, investors, and lenders. 

She agreed to help federal prosecutors build their case against Sam Bankman-Fried, the disgraced founder of FTX and a co-founder of Alameda Research. 

Ellison admitted to going along with the decision of Bankman-Fried and others not to disclose the close relationship between FTX and Alameda and the decision to divert billions in customer deposits at FTX to pay off loans of Alameda.

 Analytic Firm Arkham’s Steady Eyes On Alameda Research

Previously, Crypto analytics firm Arkham has revealed that liquidators lost $72,000 worth of digital assets while consolidating funds on the decentralized finance (DeFi) lending platform Aave. 

Despite returning $1.4 million of tokens to a central multi-sig wallet, significant sums of capital are still stranded in over 50 Alameda wallets, with the largest being worth over $14 million.

However, according to the latest update from the analytic firm, liquidators have lost at least $11.5 million since taking control of Alameda Research’s trading accounts. The total preventable loss has been $4 million. The liquidators reportedly made a string of significant losses due to liquidations, some of which could have been avoided. 

The firm also stated that if liquidators had used a function to immediately close the position by selling off collateral instead of withdrawing collateral from the wallet, at least $15 million could have been saved instead of the $11 million recovered. 

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FTX’s Attorney Alleges that SBF Ordered Gary Wang to Establish a Secret Backdoor

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An attorney for FTX, Andrew Dietderich, alleged that SBF ordered Gary Wang to establish a concealed point of access, referred to as a “secret backdoor,” that permitted his hedge fund, Alameda Research, to borrow $65 billion from clients’ funds without obtaining their approval.

According to the NYPOST, Dietderich testified that this backdoor was created by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not give their consent.

FTX Ex-CEO Moves Over $10B Between Firms

The lawyer’s testimony corroborates allegations made by the Commodity Futures Trading Commission (CFTC), which filed charges against Wang and Alameda Research CEO Caroline Ellison last month.

According to Reuters, Bankman-Fried had moved $10 billion between the two companies, with a further $2 billion still unaccounted for. However, both Wang and Ellison have pleaded guilty to federal fraud and conspiracy charges and are cooperating with investigators.

On Thursday, while awaiting trial, Bankman-Fried wrote a Substack blog post in which he declared his innocence. He asserted that he did not steal funds and did not hide away billions and that nearly all of his assets were, and still are, being used to support FTX customers.

As reported by TronWeekly, the former CEO of FTX, has outlined the convergence of three significant occurrences that ultimately caused the company’s downfall. 

In his statement, he blamed Changpeng Zhao, CZ, the CEO of Binance. He alleged that CZ waged a lengthy campaign to destroy his empire and that the “fateful tweet” on November 6th was the culmination of that campaign.

He claims that the tweet caused an extreme and quick crash in the market, which made his hedge fund, Alameda, insolvent. FTX filed for bankruptcy on November 11th, 2022.

Furthermore, SBF stated that when John Ray became CEO of FTX US and initiated the bankruptcy process, the exchange had more than $350 million in net cash. He mentioned that the net cash was more than the customer’s balances and called “the time it took for customers to receive their money back ridiculous.”

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US Hedge Funds Linked to Binance Under Investigation for Money Laundering: Report

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Federal prosecutors are currently evaluating U.S.-based hedge funds’ associations with the world-renowned Binance cryptocurrency exchange as part of a prolonged investigation into potential money-laundering infractions, according to a report by The Washington Post on January 7th.

The U.S. attorney’s office for the Western District of Washington in Seattle recently issued subpoenas to several investment firms, requesting them to provide records of their communications with Binance. 

This information was disclosed by two anonymous sources who have reviewed the subpoenas. These sources spoke on the condition of anonymity due to the confidential nature of the matter.

According to the Washington Post, Legitimate specialists proposed that the subpoenas, which had gone undisclosed until now, do not guarantee that agents are prepared to lay charges. 

Reuters reported this past month prosecutors are contemplating a potential agreement with Binance while deciding if they have sufficient evidence to present indictments against the company.

On this, the company’s chief strategy officer, Patrick Hillmann, stated that the company is in frequent communication with regulators worldwide but declined to comment on the status of any U.S. investigation.

Additionally, a Justice Department spokesperson, Joshua Stueve, refused to make a statement in regard to the ongoing federal investigation into Binance. 

This comes at an unpredictable time for the cryptocurrency sector after FTX’s dramatic downfall from alleged fraudulent activities.

Criticism On Binance Regarding Money Laundering

The failure of cryptocurrency company Celsius in July has led to increasing interconnections with other crypto failures. Celsius had lent heavily to FTX affiliate Alameda Research, which went bankrupt five months later. 

Binance’s CEO Changpeng Zhao, an early backer of FTX, sold off a large amount of the company’s digital tokens, leading to a customer panic and a run on bank deposits that FTX could not meet. As attention turns to the largest crypto exchange, Zhao has criticized FTX and called for stricter industry oversight. 

Financial regulators and law enforcement have previously criticized Zhao’s exchange for allowing users to buy and sell cryptocurrency on its platform without identification, making it easy for people to launder money. 

Binance has recently invested in compliance programs and worked closely with law enforcement to prevent criminal activity on its platform. However, a report by Chainalysis showed that cryptocurrency crime hit an all-time high in 2021, with illicit addresses receiving $14 billion. 

It is not clear if Binance is being investigated for violating the Bank Secrecy Act, which requires financial institutions to verify customer identities and report suspicious activity. 

Moreover, in response to regulatory interest, Binance has formed a global advisory board and joined the Chamber of Digital Commerce, a crypto lobbying association. Binance.US, a trading platform owned by Zhao, has hired two outside lobbying firms and launched a political action committee.

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FTX Ex-Associate Nishad Singh Under Investigation By US Authorities

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US authorities are investigating Nishad Singh, a former associate of Sam Bankman-Fried, ex-CEO of cryptocurrency firm FTX and trading firm Alameda Research, Bloomberg reported On January 5th, citing persons familiar with the matter told.

Nishad Singh, former engineering director at FTX, is also being investigated by the SEC and the CFTC. The former close associate of SBF lived with him in a Bahamas penthouse and is facing legal scrutiny as SBF fights criminal charges.

According to the report, Federal prosecutors in Manhattan are investigating whether Singh was involved in a scheme to defraud investors and clients at FTX and Alameda Research. If found guilty, he could face charges this month.

However, Singh’s lawyer and representatives for the US Attorney’s Office, SEC, and CFTC declined to comment on the investigation to Bloomberg.

Ex-FTX CEO Bankman-Fried’s Inner Circle

As reported by TronWeekly, on January 3rd, SBF pleaded not guilty to allegations in a federal court in New York. Former associates Caroline Ellison and Gary Wang have already pleaded guilty to fraud in their roles at Alameda and FTX and are cooperating with authorities. 

However, it is not clear if Singh is cooperating with US officials. According to Bloomberg, Ellison, Wang, and Singh were part of Bankman-Fried’s inner circle, and Singh was known for his coding skills and philanthropy.

According to Bloomberg’s statement:

Behind the scenes, Ellison, former chief executive of Alameda; Wang, who co-founded FTX; and Singh, formed the backbone of Bankman-Fried’s inner circle. Singh was also known as a gifted coder and philanthropist. 

The investigation into Singh’s involvement with SBF’s fraud is ongoing, and the extent of his involvement is currently unknown. In November, it was reported that Singh and others were aware of the exchange transferring funds to Alameda Research.

Last month, the exchange’s Digital Markets CEO, Ryan Salame, mentioned Singh as one of three individuals authorized to make those transfers. He was also reported to have held a $543 million loan from Alameda in November.

Moreover, inquiries into FTX’s Bahamas condominiums also named Singh. He was also named, along with Salame and former FTX CEO, as having made controversial political donations during the last election cycle.

FTX Ex-CEO Pleads Not Guilty in Federal Court 

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In order to appear in court on Tuesday, Sam Bankman-Fried, the CEO of the bankrupt crypto exchange FTX, who had been on $250 million bail over two weeks earlier, returned to New York.

CNBC reported on January 3rd that In a federal court in New York, SBF pleaded not guilty to allegations that he used customer deposits at FTX to fund his other firm Alameda Research, to buy properties and other things.

According to the statement:

The onetime crypto billionaire was indicted on charges of conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering, and conspiracy to avoid campaign finance regulations.

However, Lewis Kaplan, the judge in the case, set a trial date of October 2nd. If convicted, SBF could face more than 100 years in prison. Two of SBF’s colleagues have already pleaded guilty and are assisting with the investigation, which has had a widespread impact on the cryptocurrency industry.

The prosecution anticipated finishing up most of its discovery in the upcoming weeks, Assistant U.S. Attorney Danielle Sassoon told the court. 

Moreover, SBF’s attorneys recently submitted a request asking for the anonymity of the identity of the two people who had made bail and secured his release.

Additionally, Judge Kaplan approved SBF’s request to have the names of the two other co-signers—in addition to his parents—sealed. His attorneys contended that disclosing the co-signers’ identities raised security and privacy issues.

The Launch Of FTX Task Force

As part of their ongoing investigation into Bankman-Fried and the collapse of FTX, federal prosecutors also announced the formation of a new task force to recover assets for victims, according to a CNBC report.

In a statement, U.S. Attorney Damian Williams said that the Southern District of New York (SDNY ) is working around the clock to address the collapse of FTX. “It is an all-hands-on-deck moment,” Williams added.

To make sure that this essential effort continues, supported by all of SDNY’s resources and experience until justice is served, he added, they are establishing the SDNY FTX Task Force.

According to the statement, the task group is led by Andrea Griswold, Williams’ senior deputy. It will include attorneys from the Securities and Commodities Fraud, Public Corruption, Money Laundering, and Transnational Criminal Enterprises sections.

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Ethereum Wallets Linked To Defunct Alameda Research Shows Odd Activities

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Data analytics company Nansen has identified an odd activity of Ethereum wallet addresses linked to the defunct trading firm Alameda Research. The data reveals that with the help of the mixers FixedFloat and ChangeNow, a large number of Ethereum tokens were combined into two major wallets, exchanged for ETH and USDT, and then delivered to multiple wallets.

Crypto mixers allow users to obfuscate the flow of crypto by making it difficult to identify who owns which currency, where they came from and where they’re going. 

It does this through a process called mixing or tumbling, which combines different sources of cryptocurrency together in order to make them harder for authorities or thieves to track.

Etherscan’s data shows that after these transactions, which took place on Wednesday morning, USDT and ether were exchanged for Bitcoin. Before bridging to the Bitcoin network, these Alameda-linked wallets traded Lido, Polygon, Uniswap, and other tokens for Ethereum and USDT.

The money is being pooled in four bitcoin accounts, according to crypto investigator ZachXBT. Additionally, it shows that 47.6 BTC, or almost $800,000, are stored among these wallets in total.

SBF’s Bail & Alameda’s Ethereum Transitions

Since millions of dollars were stolen from the exchange wallets shortly after FTX declared bankruptcy on November 11, the ongoing fund transfers from Alameda wallets coincided with SBF’s release on bail.

As TronWeekly reported today that the US Department of Justice also started an investigation into the $370 million FTX exploit. Some of the stolen funds had been successfully frozen by US authorities. But just a minor fraction of the total is made up of frozen assets.

Concern regarding the bail conditions is raised. Some of them asked why the former CEO’s bail conditions banned him from having access to computers or the internet when he was frantically attempting to get money out.

However, the community is interested in the transfer of funds from Alameda wallets, but they were more interested in how these funds were transferred and for what.

Given SBF’s recent fraud history, many people speculated that the way these monies are being transferred might be an insider’s job. While others thought that it might be an exploiter scheme.