Alameda Bank Accounts Linked FTX to Customers

FTX mingled customer and business funds to access regulated banks, according to a new report.

When now-bankrupt FTX couldn’t access regulated banks because the banks were hesitant about dealing with cryptocurrency companies, it reportedly did so through its sister trading firm Alameda Research. 

Some customers were instructed to send wire transfers to Alameda Research’s accounts at cryptocurrency and FinTech bank Silvergate Capital, Bloomberg reported Monday (Nov. 28). 

Asked about the arrangement, Guidehouse Partner Alma Angotti, a veteran of the Securities and Exchange Commission (SEC) and U.S. Treasury Department, told Bloomberg that more facts are needed to determine if there was any wrongdoing, but that mingling customer funds with other funds is a bad practice in any case. 

“This is a complicated set of facts, and it’s hard to say at this point what was violated,” Angotti said. “It’s bad risk management and it’s sloppy at the very least.” 

Silvergate, a Federal Reserve member bank, helps customers move dollars and euros into crypto exchanges, according to the report. 

FTX and Silvergate Capital did not immediately reply to PYMNTS’ request for comment. 

As PYMNTS reported Nov. 18, it is FTX’s relationship with Alameda Research that is at the heart of the crypto exchange’s implosion. 

The report about the banking arrangement comes on the same day that Singapore’s state-owned investor Temasek is facing questions from members of parliament about its due diligence after writing off its $275 million stake in FTX. 

In a statement posted on its website Nov. 17 and updated Saturday (Nov. 26), Temasek said it did the same due diligence with FTX that it does with other, similar investments. 

“During this process, we enquired about the relationship, preferential treatment and separation between Alameda and FTX, and were given appropriate confirmations that were contractually binding,” Temasek said in the statement.