FTX Negotiates for Return of $400 Million From Obscure Hedge Fund

Federal prosecutors in Manhattan have also seized assets they contend were acquired with money misappropriated from FTX’s customer accounts. Last month, the prosecutors disclosed that they had seized more than $600 million in assets belonging to Mr. Bankman-Fried, including cash and stocks kept in bank and brokerage accounts.

It’s unclear why prosecutors have not seized the Modulo funds at JPMorgan. Representatives for FTX, JPMorgan and the U.S. attorney’s office for the Southern District of New York declined to comment. A representative for Modulo’s two founders, Duncan Rheingans-Yoo and Xiaoyun Zhang, known as Lily, said they declined to comment.

FTX filed for bankruptcy in November after a run on deposits exposed the $8 billion hole in its accounts. Mr. Bankman-Fried, 30, resigned as chief executive, handing control to a new management team.

In December, federal prosecutors in Manhattan charged Mr. Bankman-Fried with fraud, money laundering and campaign finance violations. He was accused of using billions of dollars in customer deposits to finance lavish real estate purchases, political donations and investments in other companies. Two of his closest associates have pleaded guilty and are cooperating with the authorities.

Prosecutors soon began scrutinizing Modulo. Ms. Zhang, a 2012 graduate of Amherst College, worked for a decade at Jane Street, a global quantitative and proprietary trading firm, before she started Modulo. Mr. Rheingans-Yoo also worked at Jane Street, joining in 2020 after he graduated from Harvard.

Ms. Zhang and Mr. Rheingans-Yoo have close personal ties to Mr. Bankman-Fried, who started his career at Jane Street. Modulo was incorporated last spring in the Bahamas, where FTX was also based. And it operated out of the same luxury resort on the Bahamian island of New Providence where Mr. Bankman-Fried lived with some of his top lieutenants.

The $400 million transaction also attracted suspicion because Mr. Bankman-Fried made the investment shortly before FTX imploded. After he was arrested in December, a local prosecutor in the Bahamas argued at a bail hearing that the FTX founder might still be able to tap the funds he had sent to Modulo, making him a flight risk. In a Jan. 17 court filing, FTX’s lawyers flagged the $400 million investment in Modulo as a likely target for recovery efforts.

Sumber: www.nytimes.com