FTX’s Sam Bankman-Fried gave $400 million to an obscure crypto trading startup; one of the founders was once romantically involved with him

What’s $400 million among friends, especially if the friend is someone you’re romantically involved with? The more we learn about the fall of disgraced FTX founder Sam Bankman-Fried (SBF), the more we realize that his crypto empire was built on a house of cards to steal more from the average investors and dole the cash to politicians and lovers. The case of FTX collapse will one day become a business school case study of corporate greed and bad decisions.

Not long before the public knowledge of FTX collapsed, it turned out that its founders and former CEO, Sam Bankman-Fried, sent $400 million to an unknown crypto hedge fund called Modulo Capital. The obscure crypto-trading firm was cofounded by a Jane Street trader just 2 years out of college, according to a report by the New York Times.

According to the Times, one of Modulo Capital’s founders was once romantically involved with the disgraced Bankman-Fried, and the other, Duncan Rheingans-Yoo, was just two years out of college. Yoo’s business partner, Xiaoyun Zhang, also known as Lily, was a former Wall Street trader who the person who had previously been romantically involved with Mr. Bankman-Fried, The Times said, citing four people with knowledge of their relationship.

The fledgling Modulo Capital was founded in March 2022, before receiving one of Bankman-Fried’s largest investments. SBF’s decision to provide $400 funding to a new crypto trading startup at the same time that sister company Alameda was losing money raised suspicions and drew the attention of investigators.

According to a spreadsheet shared by the Financial Times in December 2022, Alameda Research, the trading firm cofounded by Bankman-Fried, invested two separate sums in Modulo — $250 million and $150 million.

Other documents from lawyers handling FTX’s bankruptcy which were reviewed by BusinessInsider also showed that the $400 million was given in the third and fourth quarters of 2022.

“It’s unclear how much money Modulo had other than Mr. Bankman-Fried’s investment. But it began trading crypto before FTX failed, and it has now largely shut down, according to a person familiar with its operations,” NYT said.

Crypto publication outlet CoinDesk was the first to report that Modulo’s founders used to work at Jane Street Capital, the trading firm where Bankman-Fried began his career. However, Coindesk did not publish the identity of Modulo Capital founders.

Early this month, Bankman-Fried, 30, pleaded not guilty to federal fraud charges to eight federal fraud charges related to the collapse of the now-bankrupt crypto exchange FTX. His trial is set for October 2.

Bankman-Fried first came into the spotlight in 2020 after he donated a whopping $5.2 million to Joe Biden’s campaign, making him the second-biggest donor.

Bankman-Fried founded FTX in 2019 with his co-founder Gary Wang. The Bahamas-based crypto exchange FTX offers derivatives products like futures and options as well as spot trading. Once an unknown startup, FTX has become a key player in the crypto space, rivaling the likes of Coinbase and Binance.