FTX Seeks to Reclaim $400 Million From a JPMorgan Account: New York Times

FTX’s new leadership is negotiating the return of $400 million the crypto exchange’s founder, Sam Bankman-Fried, invested in little-known hedge fund Modula Capital, according to a New York Times report that cites four people with knowledge of the matter.

Modulo is a multi-strategy hedge fund founded in 2022 by two former Jane Street traders and one developer, a person familiar with the matter told CoinDesk in December. Jane Street is a New York-based proprietary trading firm where Bankman-Fried worked prior to making it big in the crypto industry. Public filings show Modulo was based in the Bahamas and operated from Albany, the same luxury condominium complex where Bankman-Fried and other employees of FTX and its sister company Alameda resided.

Around the time FTX collapsed, Modulo’s holdings were converted into cash and are stored in an interest-bearing account with JPMorgan, which served as its prime broker, handling its trading in stocks and stock futures, the NYT report said. The fund is looking for FTX to release it from certain legal liabilities in exchange for returning the money, the New York Times said, citing one of the four people. There is no indication that the Modulo founders did anything wrong, according to the report.

Modulo’s two founders, Duncan Rheingans-Yoo and Xiaoyun Zhang, known as Lily, recently hired Aitan Goelman, a criminal defense lawyer who is a former director of enforcement for the Commodity Futures Trading Commission, a previous New York Times report said. Goelman didn’t immediately respond to a CoinDesk request for comment.

Court filings have revealed that the U.S. government wants to take control of nearly $700 million of assets it seized in January from Bankman-Fried, according to court filings. But it is not clear why prosecutors have not seized the Modulo funds at JPMorgan, the report said.

The U.S. attorney’s office for the Southern District of New York, JPMorgan, and representatives for FTX didn’t immediately respond to CoinDesk’s requests for comment. They declined to respond to NYT requests for comment, the report said.

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