FTX is trying to get back $400 million sitting in a JPMorgan account that Sam Bankman-Fried had previously invested in an obscure hedge fund: report
- FTX and Modulo Capital are negotiating the return of a $400 million investment from Sam Bankman-Fried, according to the New York Times.
- Modulo received one of Bankman-Fried's single-largest investments shortly before FTX collapsed.
Lawyers for FTX are trying to claw back $400 million that disgraced founder Sam Bankman-Fried invested in little-known trading firm Modulo Capital, funds that are now reportedly sitting in a JPMorgan Chase account.
Around the time FTX filed for bankruptcy late last year, Modulo's holdings were converted into cash and placed in an interest-bearing account at the bank, according to the New York Times Wednesday, citing sources familiar.
The funds are still being held at JPMorgan because the bank served as the hedge fund's prime broker, according to the report. It's unclear why US prosecutors have not seized the Modulo assets at JPMorgan. The bank did not immediately respond to Insider's request for comment.
Modulo, started by two former Jane Street traders, received one of Bankman-Fried's single-largest investments. The $400 million was given in the third and fourth quarters of 2022, documents from lawyers handling FTX's bankruptcy reviewed by Insider show.
The founders of Modulo, Duncan Rheingans-Yoo and Xiaoyun "Lily" Zhang, have not been accused of any wrongdoing. However, the firm's ties to Bankman-Fried have raised questions from prosecutors. Bankman-Fried was Modulo's only investor and sent the trading shop $400 million shortly before FTX experienced a severe liquidity crunch that resulted in a $8 billion shortfall.
Modulo and FTX attorneys are now negotiating the return of those funds, sources told the Times. The move is part of an effort to repay the billions owed to creditors of the failed exchange. Last month, FTX's lawyers said the firm has so far located $5.5 billion in liquid assets.