Another revelation in the FTX saga has market participants asking more questions – What is Modulo Capital, and why did Bankman-Fried send the little-known crypto firm $400 million?

What Happened: Former FTX CEO Sam Bankman-Fried sent $400 million to Modulo Capital shortly before the collapse of his crypto empire, according to a report from The New York Times. 

Modulo is now at the center of a federal investigation into Bankman-Fried’s dealings, with prosecutors looking into the possibility that he used FTX’s customer funds to invest in the firm.

Ties to SBF: Bankman-Fried’s investment into Modulo was one of the single-largest he ever made, and has lawmakers and onlookers questioning why he would put such a large amount into a firm with little to no public presence.

According to the NYT, one of Modulo’s founders Duncan Rheingans-Yoo was only two years out of college. Rheingans-Yoo’s business partner Xiaoyun Zhang or “Lily” was a former Wall Street trader who was allegedly romantically involved with Bankman-Fried, said four people with knowledge of the subject. 

Zhang also worked at trading firm Jane Street around the same time as Bankman-Fried. This isn’t the first time we’ve heard of Bankman-Fried’s alleged romantic involvement with former colleagues that later turned into business partners. Alameda CEO Caroline Ellison, who was said to have been in a relationship with Bankman-Fried, has now testified against him.

Where Is the Money Now? A number of connected parties are looking to claim the funds sent to Modulo – particularly FTX’s liquidators who flagged the Modulo transaction in a Jan. 17 presentation to creditors.

Authorities in the Bahamas flagged the transaction at the time of Bankman-Fried’s arrest last year, claiming his potential access to the funds poses a flight risk and thus he should not be granted bail. 

It is unclear how much of this money still remains with Modulo Capital at the time of writing. People familiar with the firm’s operations say that it has since ceased all operations, which incidentally were carried out from Albany – the same luxury condo that Bankman-Fried and his inner circle stayed in.

None of Modulo’s founders have been accused of any wrongdoing, but they have hired criminal defense lawyer and former director of enforcement for the CFTC Aitan Goelman to represent them.