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FTX’s Bankman-Fried gave ex-Jane Street Traders who formed Modulo Capital $400 million

When a spreadsheet listing Sam Bankman-Fried’s venture capital investments was published by the Financial Times earlier this month, a few lines stood out. They showed that the former cryptocurrency maker’s hedge fund, Alameda Research, invested a total of $400 million in a company called Modulo Capital.

Although this represented one of Bankman-Fried’s biggest venture capital bets, Modulo’s identity was a mystery, giving rise to much speculation. Was it a Brazilian fund manager with an almost identical name (apart from a accent on the first letter O)?

No. It is a multi-strategy hedge fund founded earlier this year by two former Jane Street traders and a developer, a person familiar with the matter told CoinDesk.

Modulo Capital did not respond to a request for comment, nor did Bankman-Fried or former Alameda CEO Caroline Ellison.

Modulo, however, has more in common with Bankman-Fried than some of Alameda’s other venture capital investments.

Jane Street is a New York-based proprietary trading firm where Bankman-Fried and Ellison worked before breaking into the crypto industry. Bankman-Fried was known to hire former Jane Street employees as executives or employees, including former FTX US chairman Brett Harrison.

Also, public deposits show Modulo was based in the Bahamas and operated from Albanythe same luxury condominium complex where Bankman-Fried and other FTX and Alameda employees resided.

Read more: The cabal of Bankman-Fried housemates in the Bahamas ran his crypto empire — and dated. Other employees have many questions

Modulo traded crypto as well as traditional financial assets, two people familiar with the matter said. Modulo approached several mainstream financial institutions for funding before taking on Alameda as its sole investor, one of the people added. A person familiar with the matter confirmed that Alameda had indeed invested $400 million in Modulo.

“It didn’t seem so crazy to me. Sam liked to throw money at positive things [expected value] and Jane Street alumni seem relatively positive EV,” the person told CoinDesk. “It was better than some of the garbage that Alameda was throwing money at.”

Alameda’s investments are under intense scrutiny as creditors await repayment from a grueling bankruptcy process involving the company and its sibling, FTX, a crypto exchange. In testimony Before the U.S. House Financial Services Committee last week, new FTX CEO John J. Ray III said the deficit was estimated at $8 billion and that “a complete lack of records” made it difficult to follow the money trail.

The list of investments on the spreadsheet has also led to shocking revelations about the extent of Bankman-Fried’s ties, including speculation about whether or not he used his money inappropriately to buy gold. influence or enrich associates. In addition to the $400 million investment in Modulo, Alameda also lent $43 million to CEO of crypto media The Block, invested $25 million in Toy companies – a venture capital fund founded by FTX product manager Ramnik Arora – and acquired a $270 million stake in the IEX stock exchange under license from the United States Securities and Exchange Commission.

CORRECTION (December 19, 2022, 21:19 UTC): The Modulo Capital trio included two former Jane Street traders and a developer, not three traders.

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