A court filing Wednesday says cryptocurrency executive, Ryan Salame, blew the whistle on disgraced FTX founder Sam Bankman-Fried.
FTX founder Sam Bankman-Fried was arrested by Bahamian authorities Monday evening after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial for the onetime crypto billionaire at the heart of the crypto exchange’s collapse.
There’s no doubt in the minds of financial organizations and anti-laundering regulators that Know Your Customer (KYC) verified accounts prevent fraudulent activity– and that’s exactly the problem.
Today, the Select Subcommittee on the Coronavirus Crisis, chaired by Rep. James E. Clyburn, released a 
Coinsquare has become the latest victim of a security breach that has resulted in compromised users' personal details, the platform confirmed last weekend by sending an email to its customers.
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Cyber Security, Quantum, Hacks, Fraud Alerts, Risks, InsurTech
Co-Founder FTX Ryan Salame Blew the Whistle
A court filing Wednesday says cryptocurrency executive, Ryan Salame, blew the whistle on disgraced FTX founder Sam Bankman-Fried.
- Salame, who was co-CEO of FTX Digital Markets, an affiliated company, informed Bahamian securities regulators in the days before FTX collapsed that Bankman-Fried may have funneled customers’ investments to his hedge fund, Alameda Research, setting the stage for the 30-year-old’s downfall.
- The London-based Financial Times first reported the news Wednesday evening about Salame, citing court documents.
- The filing is the first indication to emerge during the bankruptcy process, and in the wake of Bankman-Fried’s arrest, of the role that Salame was playing within the company. It appears to be that of a whistleblower seeking to alert authorities to perceived wrongdoing.
- On Nov. 9, the Financial Times reported, Salame alerted the executive director of the Securities Commission of the Bahamas of the transfers to Alameda.
See: SBF Arrested in Bahamas
- “Mr. Salame further advised the Commission that there were only three (3) persons who had the necessary codes (or passwords) to transfer clients’ assets to Alameda in this manner,” she wrote. She said that included Bankman-Fried and two others. The list did not include Salame himself, according to Rolle’s email.
- The other two FTX executive named have not been charged with crimes.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SBF Arrested in Bahamas
CNBC | MacKenzie Sigalos and Rohan Goswami | Dec 12, 2022
FTX founder Sam Bankman-Fried was arrested by Bahamian authorities Monday evening after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial for the onetime crypto billionaire at the heart of the crypto exchange’s collapse.
- Before his arrest was announced, Bankman-Fried had been expected to testify virtually before the House Financial Services Committee on Tuesday. His arrest is the first concrete move by regulators to hold individuals accountable for the multi-billion dollar implosion of FTX last month.
- Damian Williams, the U.S. Attorney for the Southern District of New York, said on Twitter that the federal government anticipated moving to “unseal the indictment in the morning.”
See: Audio Interviews (post-bankruptcy) with Sam Bankman-Fried on FTX Collapse
- In a statement, Bahamian Prime Minister Philip Davis said:
The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law. While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.
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CBC News | Associated Press | Dec 13, 2022
U.S. Regulator: "FTX founder used investors' money as 'his personal piggy bank"
- Sam Bankman-Fried also hit with 8-count indictment by U.S. prosecutors ranging from wire fraud to money laundering to conspiracy to commit fraud on the United States.
- The indictment says Bankman-Fried allegedly committed a years-long fraud by diverting investors' funds to his private hedge fund and using the money to make venture investments, lavish real estate purchases and large political donations.
- He was also charged with making more than $25,000 in illegal campaign contributions, a notable charge as Bankman-Fried was one of the largest political donors this year.
See: Digital Asset Classification vs Wire Fraud: What’s the Most Powerful Law in Crypto Right Now
- The maximum potential prison exposure from these charges is 115 years, according to Nicholas Biase, a prosecutors' spokesperson.
- Bankman-Fried's arrest came just a day before he was due to testify in front of the House financial services committee. Representative Maxine Waters, a California Democrat and chair of the committee, said she was "disappointed" that the American public, and FTX's customers, would not get to see Bankman-Fried testify under oath. That hearing, however, will be held Tuesday.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Trust Fallacy: 75% of Payment Fraud in Crypto is Carried Out by KYC-verified Accounts
Crowdfund Insider | | Nov 28, 2022
There’s no doubt in the minds of financial organizations and anti-laundering regulators that Know Your Customer (KYC) verified accounts prevent fraudulent activity– and that’s exactly the problem.
- Then: In the early 1990s, governments around the globe had a growing concern about preventing the increasingly connected banking system from harboring international transfers of illicit funds. To combat this, they introduced KYC verification– a straightforward method of ensuring that the person a banker was speaking with was who they claimed to be. In practice, new banking customers had to present various documents, set forth by their local regulatory body, to open an account in their own name. In addition, it made it difficult for fraudsters using forged documentation to physically go from bank to bank.
See: Equifax Partners with Oasis Labs to Issue Anonymous KYC Credentials to DeFi and NFT Users
- Now - KYC verification in the digital era: In line with anti-money laundering (AML) frameworks, cryptocurrency-related organizations, such as marketplaces and trading platforms, are considered a money service business (MSB) by the US government. As such, MSBs are legally required to KYC any account that reaches a daily trading threshold. In the United States, this limit is currently $10,000 per month and above.
- BUT...Payment fraud and money laundering are not the same, and preventing crime by treating them as such is a fool’s errand. the data points to something that many in anti-fraud departments already know– KYC verification no longer serves as an anti-fraud measure.
- How fraud works: A legal resident of a foreign country can open a KYC-verified account by presenting legitimate government-issued documents, then selling their login information on the Dark Web. One person can open multiple accounts per day without ever needing to leave the comfort of their own home. These fraudsters play off two key factors:
- The first is the ease of opening accounts online instead of physically traveling to bank branches makes this illegal act scaleable. Not only do they never need to ever meet a banking representative face to face, but they also don’t even need to be in the same country.
- It is cost-effective, and they can spoof an IP address as an alibi. If they are ever questioned, they can say it wasn’t them and their information was stolen. While their account may be automatically closed, their name remains clean.
- 75% of payment fraud in crypto is carried out by KYC-verified accounts.
See: Know Your Customer – and your Obligations – in the age of Real-Time Rails and Open Banking
- Solution: machine learning technology allows organizations of all sizes to implement AI-driven systems that can identify fraudsters immediately, saving businesses money and making it annoying for them to return. By creating a space that is unwelcome for fraudsters, companies can avoid chargebacks and boost approval rates to 98%, all while reducing costs, operating expenses, and ensuring a more welcoming customer experience for those who mean no harm.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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US Subcommittee on Covid Releases Staff Report: How Certain Fintechs Facilitated Fraud in the Paycheck Protection Program
US House Subcommittee on Covid | Release | Dec 1, 2022
Today, the Select Subcommittee on the Coronavirus Crisis, chaired by Rep. James E. Clyburn, released a staff report detailing the poor performance of many financial technology companies (fintechs) in administering the nation’s largest pandemic relief program, the Paycheck Protection Program (PPP)—may have themselves committed PPP fraud
- In May 2021, the Select Subcommittee initiated an investigation into the role of fintech companies Kabbage, Inc. and Bluevine and partner banks Cross River Bank and Celtic Bank in facilitating PPP fraud following public reports they were linked to disproportionate numbers of fraudulent loans. The investigation was expanded in November 2021 to include fintech start-ups Blueacorn PPP, LLC, and Womply, Inc., after an analysis determined significant percentages of PPP loans facilitated by the companies had indicators of fraud.
- The investigation was expanded in November 2021 to include fintech start-ups Blueacorn PPP, LLC, and Womply, Inc., after an analysis determined significant percentages of PPP loans facilitated by the companies had indicators of fraud.
See: Consumer Protection: Fintech Complaints Have Been Rising
Chairman Clyburn released the following statement about today’s report:
“As today’s report details, many fintechs, while promising to help disburse billions of Paycheck Protection Program dollars to struggling small businesses efficiently and expeditiously, refused to take adequate steps to detect and prevent fraud despite their clear responsibility to safeguard taxpayer funds. Even as these companies failed in their administration of the program, they nonetheless accrued massive profits from program administration fees, much of which was pocketed by the companies’ owners and executives. On top of the windfall obtained by enabling others to engage in PPP fraud, some of these individuals may have augmented their ill-gotten gains by engaging in PPP fraud themselves.
“We must learn from this inexcusable misconduct to erect guardrails that will help ensure that federal programs—including emergency assistance programs in future crises—are administered more effectively, efficiently, and equitably while keeping waste, fraud, and abuse to an absolute minimum. Based on our initial findings, I have asked the SBA and SBA OIG to conduct further investigation into these companies and pursue all appropriate remedies, and I have informed DOJ that some of our findings may warrant its attention.”
See: UK Alternative Lenders Funding Delivery Performance to Small Businesses During COVID
- Today’s staff report is entitled “‘We Are Not the Fraud Police’: How Fintechs Facilitated Fraud in the Paycheck Protection Program” and is available in full here. The report reveals the following key findings: Fintechs and Lenders Observed Significant Fraud in the PPP, Which They Attributed to Program Mismanagement as They Sought to Evade Responsibility
- Blueacorn Took Only Minimal Steps to Prevent Fraud in Its Facilitation of Billions of Dollars in PPP Loans, While Abusing the Program to Enrich Its Owners
- Womply’s PPP Fraud Screenings Failed to Prevent “Rampant Fraud”—and Were Accompanied by Questionable Business Practices—Despite Generating Over a Billion in Profits
- Capital Plus, Harvest, and Other Fintech-Partnered Lenders Conducted Little Oversight over Womply and Blueacorn’s Activities, Allowing Fraud to Infiltrate The PPP
- Kabbage’s PPP Activities Illustrate that the PPP Lacked Incentives for Fintechs to Implement Strong Fraud Prevention Controls or Appropriate Borrower Servicing
- Bluevine Initially Faced Significant Fraud Rates, but Its Longstanding Partners Intervened to Improve Fraud Prevention Over the Course of the Program
- Based on the findings, the report includes 11 recommendations to address PPP fraud and improve future programs.
- It urges the SBA to consider carefully whether businesses like fintechs that are not subject to traditional financial regulations should be permitted to play a part in future federal lending programs, and recommends that Congress take these factors into account in considering future legislation.
View the original release --> here
Download the 130 page PDF full Staff Report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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NYT DealBook Summit: Sam Bankman-Fried Interviewed About the Collapse of FTX
New York Times | Dec 1, 2022
Image: NYT DealBook Summit
Sam Bankman-Fried, co-founder of the cryptocurrency firm FTX, gave his first live interview since his company filed for bankruptcy. Andrew Ross-Sorkin of The New York Times asked Bankman-Fried to address allegations of fraud and mismanagement and whether the people and organizations who are owed money will get any of it back.
Watch the full interview from the DealBook Summit event.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Audio Interviews (post-bankruptcy) with Sam Bankman-Fried on FTX Collapse
Coindesk | Sam Kessler, Nelson Wang | Nov 29, 2022
Image: youtube
Among the more unprecedented elements of the FTX saga has been the fact that Bankman-Fried, who was raised by two lawyers, can’t seem to keep his mouth shut despite mounting legal threats.
Sam Bankman-Fried’s crypto empire blew up in spectacular fashion at the beginning of this month, and questions continue to swirl around the motives and mechanics that caused crypto exchange FTX and its sister company, Alameda Research, to collapse.
See: CB Insights: FTX ‘Bagholders’ — Investments and M&A Portfolio Map
After cryptic tweet threads and a viral DM exchange with a Vox reporter in which he said “f**k regulators” and admitted that his philanthropic identity was largely manufactured for PR reasons, Bankman-Fried’s actual voice is being heard for the first time post-FTX collapse with newly released audio from Tiffany Fong – a crypto investor-turned-whistleblower who initially gained attention for leaking audio that showed Celsius Network, the now-bankrupt crypto lending platform, planned to use a cynical “crypto-based solution” to repay users of its Earn Lending platform.
First audio interviews with SBF post-bankruptcy
First interview with Tiffany Fong
In this phone call interview, Sam Bankman-Fried or SBF, former CEO and founder of FTX, chats with me about filing for Chapter 11 bankruptcy, the alleged backdoor, the use of FTT as collateral, ties to the Democratic Party, laundering Ukraine money, the solvency / insolvency of FTX US, lawyers, and the jurisdictional battle ahead as well as his next steps forward.
See: CFTC Says Bitcoin is the Only Commodity | ECB Criticizes Digital Asset Sector for Facilitating Illegal Activity
Second interview with Tiffany Fong
SBF Talks FTX user funds on Alameda, $8 billion hole illiquidity, CZ, the run on the bank. Sam Bankman-Fried shows remorse
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Coinsquare Announces Data Security Breach to Customers
Finance Magnates | Arnab Shome | Nov 28, 2022
Coinsquare has become the latest victim of a security breach that has resulted in compromised users' personal details, the platform confirmed last weekend by sending an email to its customers.
- Data Breach: The exchange detailed that the breach exposed "customer names, email addresses, residential addresses, phone numbers, dates of birth, device IDs, public wallet addresses, transaction history, and account balances."
- However, the crypto exchange reported some "unusual activity on our platform" on November 19 and underwent unscheduled maintenance. Then, the exchange did not detail if it was a security breach. It also restored full service on Friday ahead of sending emails to costumes about the security breach.
- Risk: A breach of personal information can also result in more severe individual account targeting. These generally make identity theft and fraud much more accessible. A similar data breach of Australian telecom service provider Optus earlier this year prompted the country's financial market watchdog to warn financial brokers of the rising risks of identity theft.
See: Suspected Sanctions Breach? The UK Forces Crypto Exchanges to Immediately Report
- Coinsquare's response: "No passwords were exposed. We have no evidence any of this information was viewed by the bad actor," the email stated, adding: "We note that your assets have always been, and remain, secure in cold storage and are not at risk."
- The Canadian exchange cautioned the users to change their passwords and enable two-factor authentication (2FA) to ensure safety
- Coinsquare touts itself to be "Canada's trusted platform to securely buy, sell and trade Bitcoin, Ethereum, and more" and received registration from the Investment Industry Regulatory Organization of Canada (IIROC) a month before.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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