Sources: FTX lawyers and hedge fund Modulo are negotiating the return of Sam Bankman-Fried's $400M investment in Modulo, currently sitting in a JPMorgan account
The founders of the trading firm Modulo Capital are in talks with FTX about returning the investment that Sam Bankman-Fried made in the fund.
Context & Ripple Effects
The $400M sitting in a JPMorgan account is the last trace of what reporting has already mapped out: Alameda Research seeded Modulo Capital, a multi-strategy fund founded in 2022 in Albany, Bahamas whose executives had close personal ties to Bankman-Fried, and the obscure fund became one of his largest single investments shortly before FTX collapsed.
Negotiation rather than litigation is notable because FTX's estate has already signaled how much it expects from this counterparty — court filings later target $460M of the $475M Alameda transferred to Modulo, so a negotiated return would deliver a large share without a fight.
First-order effects
- Modulo's founders would give up most or all of the $400M they received from Alameda, effectively winding down a fund that existed for barely a year on FTX-linked seed capital.
- FTX creditors gain a concrete recovery toward the shortfall Bankman-Fried himself failed to fill when his post-bankruptcy attempt to raise $8B came up empty.
Second-order effects
- Every other recipient of Alameda or FTX money faces the same template: FTX already announced it will claw back $70M+ in political donations from the 2021-2022 cycle, and a cooperative Modulo return makes voluntary repayment cheaper than waiting for estate litigation.
- JPMorgan's role as the custodian of disputed customer-estate funds puts the bank under scrutiny over how long such balances sit frozen while negotiations proceed.
Third-order effects
- If insiders' related-party transfers keep getting unwound this way, crypto-failure estates will standardize on clawing back pre-collapse capital shifts to founders' vehicles first, before pursuing exchanges or customers.
- The pattern pushes hedge funds and trading firms toward stricter counterparty due diligence on where investor capital originates, since accepting money from an exchange-affiliated trader proved unrecoverable here.
The trend: Crypto bankruptcy estates are shifting from ad hoc asset hunts to systematic clawbacks of insider transfers, with negotiated returns like Modulo's setting the pace for political-donation and founder-vehicle recoveries.