Sam Bankman-Fried and other FTX employees reportedly ran a “Wirefraud” chat group

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<p><figcaption class=Photo: Saul Loeb/AFP/Getty Images

Sam Bankman-Fried and other members of the inner circle of the collapsed cryptocurrency exchange FTX are said to have formed a chat group on the encrypted Signal platform under the name “Wirefraud”.

Related: House Committee to Question John J Ray III on FTX Following Sam Bankman-Fried Arrest – Live

The Australian Financial Review reported that the Wirefraud chat group was used to send end-to-end encrypted information about FTX and its hedge fund, Alameda Research, in the run-up to the stock market implosion. Members of the secret group included Bankman-Fried, his FTX partners Zixiao “Gary” Wang and Nishad Singh, and Alameda Research CEO Caroline Ellison, according to the newspaper.

Shortly before his arrest in the Bahamas at the request of the US government on Monday night, Bankman-Fried denied the story. “If this is true, then I was not a member of that inner circle (I’m pretty sure it’s just false; I’ve never heard of such a group),” he said on Twitter.

The founder and former CEO of FTX has now been charged with defrauding investors in the company by the US Securities and Exchange Commission. The criminal indictment, expected to be unsealed Tuesday by prosecutors in the Southern District of New York, reportedly includes counts of telephony fraud.

The reported existence of a “Wirefraud” chat group among top FTX operatives was revealed just a day before Bankman-Fried was scheduled to testify before the US House Financial Services Committee. That appearance will no longer be possible as he is being held in custody and is expected to appear before a magistrate’s court in Nassau, the capital of the Bahamas.

Attorney John J Ray III will testify in the congressional hearing at Bankman-Fried’s home. Ray has taken over as CEO of FTX to help guide the company through bankruptcy, as well as the many criminal and other investigations it now faces from law enforcement and regulators in the US and abroad.

FTX filed for bankruptcy last month after a lightning strike to its fortune left it with a billion-dollar deficit in its accounts. In his drafted statement to the House Committee, Ray said that it was already known that FTX assets were “intermixed with assets of the Alameda trading platform” and that “Alameda was using client money to engage in margin trading, allowing money from customers was exposed to huge losses.”.

He added that the task of untangling FTX’s finances was complicated as “we are starting at almost zero in terms of the corporate infrastructure and record keeping that one would expect to find in a multi-billion dollar global enterprise”.

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