By NEIL HARTNELL
Tribune Business Editor
A Bahamian bank and trust company was yesterday tight-lipped over court documents showing that FTX and entities controlled by its besieged founder, Sam Bankman-Fried, held no fewer than 17 accounts with it.
Deltec Bank & Trust neither confirmed nor denied whether it had any banking relationships with the collapsed crypto exchange, its affiliates or Mr Bankman-Fried when contacted by Tribune Business over filings in the Delaware federal bankruptcy courts.
Documents produced by John Ray, the newly-appointed chief executive for FTX Trading, disclosed that the latter entity held just one account at Deltec. However, a further nine were said to be in the name of Alameda Research, the trading/hedge fund entity controlled by Mr Bankman-Fried, and which is thought to have played a central role in the crypto exchange’s week-long implosion.
The remaining seven Deltec accounts were in the name of West Realm Shires Services, a Delaware-based entity also majority-controlled by Mr Bankman-Fried together with fellow FTX co-founder, Gary Wang, and the crypto exchange’s engineering head, Nishad Singh. The 17 Deltec accounts were held in a variety of currencies, including US dollars, euros, Swiss francs, Canadian and Australian dollars, and the UK pound sterling.
A Deltec spokesperson, responding to Tribune Business inquiries on the accounts, declined to confirm their existence or purpose. “The Banks and Trust Companies Regulation Act rules prohibit the bank from the disclosure of any client information, and as such we are unable to confirm banking relationships or comment on any specific clients - or transactions- that take place during the normal course of traditional business banking,” they said.
The Lyford Cay-based institution, which has aggressively embraced the digital assets evolution by setting up its Delchain subsidiary to target this area, has fought hard to distance itself from FTX and Mr Bankman-Fried since the crypto currency exchange imploded. It has vigorously denied that its purchase of Ansbacher (Bahamas), which closed at end-March 2022, was funded at least in part with financing from FTX.
“We have been made aware of the rumors related to the acquisition of Ansbacher (Bahamas) by Deltec Bank & Trust that are unfounded and unsubstantiated,” it responded, when Tribune Business first raised the issue. “ Firstly, we would like to make it clear that this rumor is malicious and completely baseless. The latest independent auditor’s report shows that Deltec Bank is well capitalised. Additionally, the bank carries no debt and is not a creditor to FTX.
“While we are all saddened by the news surrounding FTX, we urge the financial services community to act responsibly and not spread rumors that are frivolous and attempt to damage the reputation of financial institutions in the jurisdiction. During such a fragile point in our industry, we must focus on facts and actual events.”
Deltec then doubled down on this position with a November 14, 2022, statement that remains posted to its website. “FTX did not provide any services to or hold any assets for the bank,” it reiterated. “Deltec Bank does not hold or trade any digital assets for its own account or on behalf of its clients. Therefore, there is no credit or asset exposure by the bank to FTX.
“Deltec Bank has designed a business model that adheres to stringent regulations, can withstand the pressure of an ever-changing financial environment, and ensure the protection of our clients. With this, we have prioritised forward-thinking financial solutions that are aligned with a rigorous risk framework and meet highly prudent standards.
“Additionally, we are well-capitalised and maintain a conservative balance sheet. These prudent practices ensure that there is no threat to the bank’s sustainability, safety and soundness.”
Meanwhile, the Deltec Bank & Trust spokesperson also denied that the Bahamian institution has any links or ties to the $11.5m investment earlier this year by Mr Bankman-Fried’s Alameda Research into the 26th smallest bank in the US.
US and crypto media have over the past several days repeatedly questioned why the FTX chief’s trading arm would invest several times more than what Farmington State Bank, an entity located in rural Washington state in a town with just over 100 residents, was actually worth. The investment, which was formally unveiled on March 7, 2022, came just two years after the bank was acquired by a parent entity called FBH Corporation.
FBH Corporation’s chairman was named as Jean Chalopin, creator of the well-known Inspector Gadget cartoons, and who also happens to be chairman of Deltec Bank & Trust. The Deltec spokesperson told this newspaper: “Deltec Bank has no business or banking relationships with Farmington State Bank (doing business as Moonstone Bank).
“The only reason Deltec Bank has been mentioned in recent media is due to common shareholdings through businessman Jean Chalopin.” While Deltec has vehemently denied any FTX involvement in its Ansbacher purchase, the connections between the former’s chairman and Alameda Research were yesterday causing some to ask whether it was Mr Bankman-Fried’s trading arm - rather than the crypto exchange - that helped fund that acquisition.
The announcement of Alameda Research’s Farmington investment made clear Mr Chalopin’s ambitions to turn the bank from a relatively staid institution, focused on loans to small community farmers and businesses, into a razzle-dazzle financier of crypto currencies, blockchain and digital assets.
“Alameda Research’s investment into FBH Corp and Moonstone Bank signifies the recognition, by one of the world’s most innovative financial leaders, of the value of what we are aiming to achieve. This marks a new step into building the future of banking,” Mr Chalopin was quoted as saying.
Moonstone was described as “a robust financial platform to empower fast-growing innovative and disruptive sectors. Its new chief executive, Ronald Oliveira, was charged with “leading the digital transformation of the organisation into a top provider of innovative financial services to fast-growing industries such as blockchain, cryptocurrencies and cannabis”.