The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Allegations that a Bahamian non-profit established by jailed FTX founder Sam Bankman-Fried was a “sham” were yesterday denied by the expatriate executive who oversaw its operations.

Ross Rheingans-Yoo, in legal filings with the Delaware Bankruptcy Court, hit back at claims by John Ray, head of the 134 FTX entities in Chapter 11 protection, that Latona was merely set-up and used as a conduit through which monies and assets belonging to the crypto exchange’s clients were funnelled without their knowledge.

Asserting that Mr Ray’s allegations are “replete with red herrings and misleading half-truths”, and serve as a “transparent attempt to poison the well” against him, Mr Rheingans-Yoo blasted: “The debtors alleged in their adversary proceeding that Latona’s investments in life sciences companies were funded by frauds perpetrated on the debtors by Bankman-Fried.

“The debtors then allege that Rheingans-Yoo aided and abetted Bankman-Fried’s fraud. That is false. Rheingans-Yoo was not part of Bankman-Fried’s inner circle who knew about and facilitated the misappropriation of FTX customer funds. During Bankman-Fried’s criminal trial, none of the testimony implicated Rheingans-Yoo. Instead, Rheingans-Yoo was a faithful employee who found himself in a mess he did not create.”

As for Latona, Mr Rheingans-Yoo added: “The debtors also allege that Latona is a ‘sham’. To the contrary, Latona was duly organised as a non-profit company pursuant to Bahamas law and capitalised pursuant to executed inter-company loan agreements between Latona and Alameda. These facts are absent from the debtors’ objection.

“The evidence in the adversary proceeding will show that Rheingans-Yoo performed his duties as a Latona director with the utmost good faith and without any knowledge of Bankman-Fried’s fraud. The debtors know this, but they are pressing the issue because they also know that Bankman-Fried is unpopular.”

Documents attached to Mr Rheingans-Yoo’s legal fiings include Latona’s certificate of incorporation from the Registrar General’s Department, plus its Memorandum and Articles of Association. The incorporation certificate is dated May 20, 2022, less than six months before FTX’s implosion.

The Memorandum of Association reveals that Latona Bioscience Group was created on April 29, 2022. Besides Mr Rheingans-Yoo and Mr Bankman-Fried, the other subscribing director and signatory was Valdez Russell, the Bahamian vice-president of communications for FTX Digital Markets, the crypto exchange’s local subsidiary. There is no suggestion he has done anything wrong.

Latona’s registered office was the Shirley Street chambers of the Clement T. Maynard & Company law firm. Clement Maynard III signed its statutory declaration. One source, speaking on condition of anonymity, said Latona was created as a conduit for Mr Bankman-Fried’s “effective altruism” and professed desire to donate to good causes.

“What Latona offered was a conduit for Sam and his team to identify causes they wanted to address. This was the arm for effective altruism to function on a global scale,” one contact explained. “They sought to address what they thought to be vexing problems in the world. That was explained by some of the discussion around debts of third world countries.

“They wanted to be prepared for the next pandemic, do testing and provide funding for those causes. They sought to bring people from around the world to address effective altruism topics in The Bahamas with varying degrees of success. There were meetings here that reflected a genuine effort on the effective altruism side because everyone thought Sam’s efforts were genuine.”

Tribune Business previously reported how Mr Rheingans-Yoo and FTX seemingly breached Bahamian Immigration regulations by the former working outside the scope of his work permit. Mr Ray produced evidence that he had obtained a Bahamian work permit to act as a trader for Alameda Research (Bahamas), even though he was working for Latona.

Alameda was the Bahamian affiliate of the private hedge fund/trading arm set up by Mr Bankman-Fried. Yet Mr Ray alleged that in reality, Mr Rheingans-Yoo was working for “a sham Bahamian non-profit” to help channel $71.55m in purported charitable donations to life sciences companies.

These allegations, if accurate, would mean Mr Rheingans-Yoo was working outside the scope of his work permit. Keith Bell, former minister of labour and Immigration, previously warned that such breaches will result in work permits being revoked if detected.

The approval for Mr Rheingans-Yoo’s work permit, dated April 30, 2022, and signed by Keturah Ferguson, the then-Immigration director, confirmed that it was valid for a year and stipulated he would be acting as a “trader” for Alameda Research (Bahamas). The approval was addressed to Clement Maynard III at Clement T. Maynard & Company, the Bahamian law firm then representing FTX’s interests locally.