FTX executives used the “Korea” account to disguise Giant Alameda’s responsibilities

(Bloomberg) — A GitHub account bearing the name of former FTX executive Nishad Singh created the code hiding Alameda Research’s growing liabilities on the now-collapsed cryptocurrency exchange, according to internal documentation reviewed by Bloomberg News.

Most read by Bloomberg

The documentation, in the form of comments associated with specific lines of code, offers clues to the origins of a mysterious FTX account that a regulator claims helped mask the mounting debts of its sister trading firm Alameda Research. The two companies’ relationship and alleged misuse of FTX client funds has led to criminal charges against founder Sam Bankman-Fried.

Singh, who was the technical director of FTX, has not been charged with any crime. GitHub is a programming code repository that companies and individual software developers use to store and share code. GitHub is often used to allow developers to work together. It wasn’t immediately clear whether other FTX employees had access to the account.

The GitHub account that bears his name annotated code snippets Bloomberg reviewed with comments including “Korea KYC” and “BD expense accounts,” the docs reviewed by Bloomberg News showed. The latter was tied to a “Korea Expenses” account.

Alameda diverted debts, which have ballooned to $8 billion, to an FTX client account that was not easily identifiable as belonging to Alameda, the U.S. Commodity Futures Trading Commission said in a civil complaint Tuesday. Bankman-Fried, who founded Alameda and FTX, called it “our Korean friend’s account” and ordered it created at least in part to mask Alameda’s open liabilities, the CFTC said.

The so-called Korean account enjoyed the same privileges as Alameda’s main account and sub-accounts, including exemptions from parts of FTX’s risk management policies, the lawsuit said.

Singh and representatives from Bankman-Fried and FTX did not immediately respond to requests for comment. Bankman-Fried is being held without bail in a Bahamian prison pending an extradition hearing in February.

While Alameda has enjoyed virtually unlimited access to FTX client funds for its trading purposes since the exchange was created, the company began to plummet in May after a $60 billion cryptocurrency ecosystem built on TerraUSD and Luna tokens collapsed and lenders demanded payments. This has led Alameda to increase its use of FTX client funds, regulators said.

Do Kwon, a South Korean national who was behind TerraUSD, is reportedly in Serbia. A South Korean court issued an arrest warrant for him in September on charges of violating capital markets laws.

Months after the jarring round of margin calls began, Bankman-Fried contemplated closing Alameda around September, according to the CFTC complaint. He drafted a Twitter thread announcing its closure, saying “I’m really unsure of what’s right!” But Alameda never closed.

Bankman-Fried was jailed on Tuesday after US authorities filed eight criminal charges against him, including fraud and conspiracy to commit money laundering. The US Securities and Exchange Commission has also sued him.

The CFTC’s complaint described the “Korean account” as a sub-account of Alameda that was not opened with an identifier “alameda-research.com” and not otherwise readily identifiable as an account associated with Alameda.

–With assistance from Olga Kharif.

Most Read by Bloomberg Businessweek

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published. Required fields are marked *