Federal prosecutors in Manhattan also seized assets they say were purchased with money embezzled from FTX client accounts. Last month, prosecutors revealed that they had seized more than $600 million in assets belonging to Mr. Bankman-Fried, including cash and shares in bank and brokerage accounts.
It is unclear why prosecutors did not seize Modulo’s funds at JPMorgan. Representatives for FTX, JPMorgan and the US Attorney’s Office for the Southern District of New York declined to comment. A representative for Modulo’s two founders, Duncan Rheingans-Yoo and Xiaoyun Zhang, known as Lily, said they declined to comment.
FTX filed for bankruptcy in November after a run on deposits exposed the $8 billion hole in its accounts. Bankman-Fried, 30, stepped down as chief executive and handed over 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 was accused of using billions of dollars in customer deposits to finance lavish real estate purchases, political donations and investments in other businesses. Two of his closest associates have pleaded guilty and are cooperating with authorities.
The consequences of the fall of FTX
The spectacular collapse of the cryptocurrency exchange in November has left the industry stunned.
Prosecutors soon began examining Modulo. Ms. Zhang, a 2012 graduate of Amherst College, worked for a decade at Jane Street, a global quantitative trading firm and owner, before starting Modulo. Mr. Rheingans-Yoo also worked at Jane Street, joining in 2020 after graduating from Harvard.
Ms. Zhang and Mr. Rheingans-Yoo have close personal ties to Mr. Bankman-Fried, who began his career at Jane Street. Modulo was incorporated last spring in the Bahamas, where FTX is also based. And he operated out of the same luxury resort on the island of New Providence in the Bahamas where Bankman-Fried lived with some of his top lieutenants.
The $400 million transaction also raised suspicions because Bankman-Fried made the investment shortly before FTX collapsed. After he was arrested in December, a local prosecutor in the Bahamas argued at a bond hearing that the FTX founder could still take advantage of funds he had sent to Modulo, making him a flight risk. In a January 17 court filing, FTX lawyers pointed to the $400 million investment in Modulo as a likely target for recovery efforts.
