US authorities have accused ex-FTX chief executive Sam Bankman-Fried of using his former company’s funds to invest in venture capital (VC) enterprise Modulo Capital.
The New York Times reported that FTX’s sister company Alameda Research had invested around $400 million USD in the “obscure” VC firm in 2022 — one of its largest investments.
This triggered responses from regulators amid the ongoing cryptocurrency crisis. In the ongoing probe of FTX’s collapse, investigators found the Modulo investments leveraged criminal and misappropriated funds from FTX deposits.
The report added that FTX lawyers were looking at Modulo’s assets as they searched for billions in unrecovered funds across the disgraced crypto platform’s balance sheets.
Former Alameda Research chief executive Caroline Ellison and Bankman-Fried worked for Jane Street. Three co-founders of Modulo formerly worked at the company headquartered in New York.
The news comes after investigators also found key FTX executives had splurged roughly $40 million USD in investor money for personal gain.
Bankman-Fried, Ellison, and others from the firm spent the funds on luxury hotels, shipping, meals, and global travel. Investigators revealed the embezzlement began just months before FTX collapsed.
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