FTX founder Bankman-Fried and Alameda CEO Ellison hire lawyers as investigations intensify

Former FTX chief executive Sam Bankman-Fried and Ms Caroline Ellison, head of its now defuncttrading branch, chose lawyers to defendU.S. authorities are investigating the collapse of a cryptocurrency exchange, according to a spokesman for Mr. Bankman-Fried and a source familiar with Ms. Ellison's selection. According to a representative of the FTX founder, Mr. Bankman-Fried hired Mr. Mark Cohen of the firm Cohen & Gresser. Mr. Cohen recently defended Ghislaine Maxwell in a human trafficking case.

 

Mrs. Ellison, who ran a trading firmAlameda Research has hired law firm Wilmer Cutler Pickering Hale and Dorr to represent it, a source familiar with the matter told Reuters. Regulators around the world, including in the Bahamas, where FTX is based, and the US, are investigating the role of FTX executives, including Mr Bankman-Fried, in the company's stunning collapse. The crypto exchange filed for bankruptcy last month after a liquidity crisis saw at least US$1 billion (S$1.36 billion) worth of customer funds disappear. Prosecutors and regulators have not charged Mr. Bankman-Fried or Ms. Ellison with a crime. They are facing civil lawsuits from FTX clients. Previously, Mr. Bankman-Fried hired Mr. Martin Flumenbaum of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison, but last month the law firm said it was no longer representing him due to conflicts.

 

In recent weeks, US authorities have requestedinformation from investors and potential FTX investors, according to two people familiar with the inquiries. Federal prosecutors in New York are asking for details of any such companies' contacts with the cryptocurrency company and its executives, including Mr. Bankman-Fried, the sources said. The US Securities and Exchange Commission also requests similar information from investors, one of the sources said. Those sources and attorneys, who spoke on condition of anonymity, said US authorities were likely looking for any evidence of material misrepresentation for investors. FTX has secretly transferred customer funds to its subsidiary Alameda Research to fill a shortfall in a cryptocurrency trading firm, Reuters previously reported.

 

The Wall Street Journal previously reported that Ms.Ellison and senior FTX officials knew that the crypto exchange was using its clients' funds to help Alameda meet its obligations. Speaking via video link at the New York Times' DealBook summit on November 30, Mr. Bankman-Fried said he was unaware that he was commingling funds from FTX clients with funds from his own trading firm, Alameda Research. “I have never attempted to commit fraud”, – Mr. Bankman-Fried said, adding that he does not believe he bears any criminal responsibility.