FTX Lawyers Can Now Subpoena Sam Bankman-Fried’s Group of ‘Insiders’

A judge granted FTX’s legal team permission to subpoena FTX co-founders Sam Bankman-Fried and Gary Wang, ex-Alameda Research CEO Caroline Ellison, Bankman-Fried’s parents, and his brother Gabriel, according to a court order filed on Wednesday.

FTX’s legal team asked for permission to send subpoenas to the group, which it calls the “Insiders,” on January 25, saying that some within Bankman-Fried’s inner-circle have been cooperating with the restructuring team’s efforts to recover assets.

“Key questions remain, however, concerning numerous aspects of the Debtors’ finances and transactions,” attorney Kimberly Brown wrote in the January 25 motion. It also names Nishad Singh, ex-chief technology officer at FTX, and Constance Wang, who was formerly a co-CEO of FTX Digital Markets with Ryan Salame, saying they have not been cooperating with efforts to recover customer funds.

It’s worth noting that Ellison and Wang have pleaded guilty to criminal and civil charges brought against them by the Department of Justice, Securities and Exchange Commision, and Commodities Future Trading Commission. The pair have been cooperating with an ongoing investigation led by attorneys with the Southern District of New York.

Documents obtained by The Wall Street Journal in December revealed that Salame sent a tip on November 9 to authorities in the Bahamas, where FTX was headquartered. He alleged that trading desk Alameda Research was using FTX customer funds to cover its losses. Two days later, FTX filed for bankruptcy and Bankman-Fried resigned as CEO.

Just days earlier, a leaked balance sheet from Alameda Research showed that the fund was holding billions worth of FTT, the FTX exchange token, against billions worth of liabilities. If it liquidated its holdings to pay its creditors, it risked tanking the token’s price. If it didn’t, it would face default notices on its debts.

It’s not the first time a restructuring team has had to resort to sending subpoenas in an attempt to get information from crypto company insiders.

Early on Wednesday, the legal team overseeing the restructuring of Three Arrows Capital, which goes by 3AC, asked a judge to compel co-founder Kyle Davies to cooperate. They alleged in the court filing that he’s been “withholding information.”

Davies and fellow co-founder Su Zhu were served a subpoena on Twitter on January 5 and given until January 26 to produce financial documents. Now that they’ve missed that deadline, the 3AC liquidators are seeking to set a new deadline of March 16.