As a reminder, the cryptocurrency exchange FTX has more than enough possible sins. First of all, its management has been accused of misusing the platform’s users’ funds without their consent. In particular, customers’ money could have been used to fund Alameda Research’s trading activities, donate to politicians, and solve Alameda’s financial problems. Most interestingly, it did not even pay any interest on the loans, i.e. it simply used FTX users as a source of endless funds.

Most importantly, FTX users’ funds were intermingled with Alameda’s finances, which is also a violation of business rules.

Sam Bankman-Fried, founder of the FTX cryptocurrency exchange

All in all, it seems that the authorities and law enforcement did take an interest in Sam Bankman-Fried’s activities prior to his arrest. As Congresswoman Maxine Waters stated the day before, they had an arrest warrant for the FTX founder even earlier. Accordingly, the whistleblower version of the company’s actions does look plausible.

Who ratted out the founder of the FTX crypto exchange?

According to Cointelegraph’s sources, in an appeal to regulators, Salame noted that the funds were to “cover Alameda’s financial losses” and the transactions themselves were initiated “without customer agreement”. In addition, only three people had the authority needed to transfer the assets – Sam Bankman-Fried, FTX co-founder Zixiao “Gary” Wang and developer Nishad Singh.

Thanks to information from Salame, Bahamas Securities Commission executive director Christine Rolle decided to launch an investigation with local police into the exchange as there “may be misappropriation, theft, fraud or some other crime” in its operations. The next day, on 10 November, the regulator froze FDM’s assets, suspending the company’s registration in the country, and the Supreme Court of the Bahamas appointed a provisional liquidator to preserve the exchange’s funds.

FTX Digital Markets management member Ryan Salame

Salame thus became the first member of FTX’s management team to formally cooperate with government authorities. But there are also rumours that former Alameda CEO Caroline Allison is also cooperating in the investigation. A couple of weeks ago she was spotted in a New York coffee shop within walking distance of the US Attorney’s office.

Caroline Ellison spotted in New York the day before

The founder of the whole “crypto empire” Sam Bankman-Fried was arrested in the Bahamas this week. He tried to make himself look as good as possible until the last minute, but Sam will now remain in custody.

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Part of the blame for FTX’s failure should also allegedly be placed on the CEO of rival exchange Binance, Changpen Zhao, a statement made in front of the US Senate Committee on Banking and Urban Affairs by prominent Canadian businessman Kevin O’Leary. Furthermore, O’Leary called Binance a “huge, unregulated monopoly” within the cryptocurrency industry.

Most amusingly, Kevin somehow failed to mention the multibillion dollar hole in FTX's balance sheet. It also doesn't bother him that crypto exchange user funds were used for the personal needs of the company's management, as well as to cover the liabilities of trading company Alameda Research.

This is the very moment where O’Leary suddenly started blaming Binance for what was going on. He did so in response to a question about what may have caused FTX’s collapse.

That said, there has been a lot of information circulating on crypto-twitter that O'Leary received $15 million from Sam Bunkman-Friede. This, among other things, may explain Kevin's illogical loyalty to Sam, who has already gone to jail.

Binance did play its part in the collapse of FTX. A few days before the exchange officially declared bankruptcy, Binance CEO Zhao announced the sale of its native FTX Token from its reserves. The reason for this decision was Changpen’s uncertainty about FTX’s financial stability due to the previously leaked financial report of partner trading company Alameda Research with numerous problems in it.

A little later FTX management stated that the platform could be acquired by Binance, but Zhao refused to go for such a deal. As a result, Sam and his team simply had no “escape route” left – they had to file for bankruptcy. Zhao, after the collapse of FTX, repeatedly stressed that Bankman-Fried was solely responsible for the collapse of his company.

Zhao’s actions in the most extreme case can be seen as unethical, but they are legitimate. He acted within his authority, and he also had the right to get rid of the tokens. Incidentally, Binance itself has also come under serious pressure, with many doubting the exchange’s recently released proof of its own reserves.

Binance chief executive Changpen Zhao


We think the involvement of one of the top cryptocurrency exchange FTX in the investigation makes sense. After all, the platform's problems due to its close ties with Alameda Research were known in advance, so it was also realistic for the same Sam to foresee a further outcome. So in this case the testimony of Bankman-Fried's colleagues was also a possibility.


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