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Regulators Investigate FTX's $400 Million Investment in Modulo Capital

Regulators Investigate FTX's $400 Million Investment in Modulo Capital

FTX has allegedly used money from the exchange to invest in the venture capital firm, Modulo Capital.

According to the New York Times report, FTX’s sister firm Alameda Research invested a total of $400 million in Modulo, in December 2022. It was the largest investment made by Sam Bankman-Fried.

Modulo recently raised a substantial amount of capital during tough times for the crypto market, which drew the attention of regulators.

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According to investigators, the investment into Modulo was likely made using criminal proceeds or misappropriated money that FTX customers had deposited with the exchange.

FTX lawyers are now reportedly eyeing Modulo's assets as they scramble to recover billions of dollars from repaying customers, investors, and other creditors. The whereabouts of Bankman-Fried's $400 million investment are currently unclear.

The public filing also showed that the venture capital Modulo was a Bahamas-based firm from Albany. Albany is the luxurious complex where Alameda and FTX employees used to reside and make it to the headlines because of their lavish expenditures. ​​

Modulo Capital was founded in March 2022 by three former executives at Jane Street, a New York-based firm that once employed Bankman-Fried and Alameda CEO Caroline Ellison. 

One of the founders, Duncan Rheingans-Yoo, was reportedly only two years out of college when Modulo Capital was launched. Another Modulo co-founder, Xiaoyun Zhang, known as Lily, was a former Wall Street trader with ties to Bankman-Fried. 

U.S. commissioner for Commodity Futures Trading Commission (CFTC), Christy Goldsmith Romero, was concerned about the current situation.

Why did they turn a blind eye to what should have been really flashing red lights?

The commissioner questioned the due diligence work done by venture capitalists and money managers who funded FTX.

Aaron S. , Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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