Prosecutors are relatively clear about the relations between trading firm Alameda Research and crypto exchange FTX following the recent investigations. Alameda is found to be the primary firm supporting FTX operations including accounts, transfers, trading, and others as FTX spun off from Alameda in 2019.

With banks reluctant to work with a crypto companies including FTX, Sam Bankman-Fried gained access to regulated banks through Alameda Research. Customers were sending wire transfer to FTX through Alameda associated banks. These banks may potentially be under scrutiny for allowing transfers.

The arrangement though Alameda allowed FTX to receive customer funds. Customers were instructed to send wire transfers through Alameda accounts at Silvergate Capital, Signature Bank, Trust Bank, and others. Some FTX customers continued sending wire transfers through Alameda this year, reported Bloomberg on November 29.

The arrangement between Alameda and FTX caused problems in record-keeping and management. It raised concerns about misuse of customer funds due to transactions between the two firms. SBF believes people wired $8 billion to Alameda.

(By Varinder Singh)