Earlier this month, the Financial Times released a spreadsheet detailing Sam Bankman-startup Fried’s investments. The documents demonstrated that the erstwhile bitcoin kingmaker’s hedge fund, Alameda Research, had sunk $400 million into Modulo Capital.
Although this was one of Bankman-biggest Fried’s VC bets, Modulo’s identity remained a secret, leading to widespread conjecture. Was it a Brazilian investment banker with almost the same name?
No. According to some sources, the firm is a multi-strategy hedge fund established this year by two ex-Jane Street traders and one developer.
Modulo Capital, Bankman-Fried, and ex-Alameda CEO Caroline Ellison all declined the requests for comments. However, compared to some of Alameda’s other venture investments, Modulo has more in common with Bankman-Fried.
Before their success in cryptocurrency, Bankman-Fried and Ellison both worked for Jane Street, a proprietary trading firm in New York. Bankman-Fried has a history of hiring ex-Jane Street staff, such as former FTX US President Brett Harrison.
Furthermore, public documents reveal that Modulo was headquartered in the Bahamas and operated out of Albany. Bankman-Fried and other FTX and Alameda personnel lived in the same high-end apartment complex.
Reportedly, Modulo traded both cryptocurrencies and more conventional financial assets. Before deciding to take on Alameda as its only investor, Modulo had contacted more traditional financial institutions. Alameda did indeed put $400 million into Modulo.
SBF laundered money through a hedge fund run by ex Jane Street dudes https://t.co/wd3LYs7I9z
— Sean Tuffy (@SMTuffy) December 19, 2022
Creditors of Alameda and its crypto exchange twin, FTX, are waiting patiently through a lengthy bankruptcy procedure, during which they will be repaid. This week, new FTX CEO John J. Ray III testified before the U.S. House Financial Services Committee and claimed the shortfall was estimated at $8 billion. A lack of documentation has made it difficult to track the money path.
Bankman-Fried’s large web of connections was exposed by the spreadsheet’s list of investments, sparking questions about whether or not he had unlawfully used his wealth to purchase influence or enrich allies. Alameda has invested $400 million in Modulo, loaned the CEO of crypto news outlet The Block $43 million, invested $25 million in Toy Ventures, and purchased a $270 million stake in SEC-registered stock exchange IEX.