FTX to claw back $460 million from SBF-backed hedge fund

ambcrypto.com:

On 22 March, the FTX estate filed a motion to enter into a settlement to recover $460 million in assets for stakeholders.

The assets are a clawback from a Bahamas-based hedge fund Modulo Capital, which received $475 million in seed capital from FTX’s sister trading firm Alameda Research in 2022. This hedge fund was founded last year and headed by two acquaintances of former FTX CEO Sam Bankman-Fried “SBF,” Xiaoyun “Lily” Zhang and Ducan Rhenigans-Yoo.

According to the filing, the $460 million in recovered assets represents over 99% of Modulo’s remaining assets and includes $404 million in cash. Modulo would also waive any claim to $56 million in assets held in FTX.com and FTX.US accounts. Alameda would also lose any claim to its shares in Modulo because of the settlement.

The agreement must still be approved by U.S. Bankruptcy Judge John Dorsey, who has scheduled a motion hearing for 12 April.

Alameda Research was said to have invested around $400 million in Modulo Capital in 2022, making it one of FTX’s largest investments under SBF’s leadership.

FTX further claimed that Alameda Research’s investment was made under the direction of SBF. Alameda Research and Modulo Capital entered into a limited partnership agreement in June last year in which the former transferred funds to the latter in exchange for 20% ownership of Modulo’s Class A shares.

The filing mentioned:

“The terms of the Agreement provide for the return of nearly all of the value transferred by the Alameda Debtors to the Modulo Entities while avoiding the time and expense of pursuing the Claims through litigation.”

Payments made to entities prior to the bankruptcy filing may be eligible to be given back and redistributed to creditors in bankruptcy proceedings. While