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March 29, 2024

Federal prosecutors in Manhattan have also seized assets they believe were obtained with funds embezzled from FTX customer accounts. Last month, prosecutors revealed they seized more than $600 million in assets belonging to Bankman-Fried, including cash and stocks in bank and brokerage accounts.

It’s unclear why prosecutors didn’t seize JPMorgan’s Modulo funds. Representatives for FTX, JPMorgan and the U.S. Attorney’s Office for the Southern District of New York declined to comment. Representatives for Modulo’s two founders, Duncan Rheingans-Yoo and Xiaoyun Zhang, also known as Lily, declined to comment.

FTX filed for bankruptcy in November after a deposit run exposed an $8 billion hole in its accounts. Mr Bankman-Fried, 30, stepped down as chief executive, handing control to a new management team.

In December, federal prosecutors in Manhattan charged Mr. Bankman-Fried with fraud, money laundering and campaign finance violations. He is accused of using billions of dollars in customer deposits to fund lavish real estate purchases, political donations and investments in other companies. Two of his closest associates have pleaded guilty and are cooperating with authorities.

Prosecutors soon began examining Modulo. Ms. Zhang graduated from Amherst College in 2012. Before founding Modulo, she worked for Jane Street, a global quantitative and proprietary trading firm, for ten years. Mr. Rheingans-Yoo also worked at Jane Street, which he joined in 2020 after graduating from Harvard University.

Ms. Zhang and Mr. Rheingans-Yoo have a close personal relationship with Mr. Bankman-Fried, who began his career on Jane Street. Modulo launched last spring in the Bahamas, where FTX is based. It operates from the same luxury resort on New Providence Island in the Bahamas, where Mr Bankman-Fried lives with some of his top lieutenants.

The $400 million deal also raised skepticism because Mr. Bankman-Fried made the investment shortly before the FTX crash. After his December arrest, a local prosecutor in the Bahamas argued at a bail hearing that the FTX founder may still have access to funds he sent to Modulo, putting him at risk of flight. In court filings dated Jan. 17, lawyers for FTX flagged the $400 million investment in Modulo as a possible target for the resumption of work.



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