Of the roughly 130 companies in Sam Bankman-Fried’s vast crypto empire, North Dimension Inc. is keeping a low profile. Unlike FTX, its name has not been splashed on billboards or sports arenas, and its activities have not been endorsed by celebrities.
Yet North Dimension has played a crucial role in the FTX mess, regulators now say. In fact, they claim, the little-known company played a pivotal role in stealthily embezzling funds from FTX clients.
As a subsidiary of Alameda SearchThe crypto hedge fund and trading firm also founded by Bankman-Fried, North Dimension was where FTX clients had to wire money if they wanted to trade on its exchange, according to a complaint filed Wednesday by the Securities and Exchange. Exchange Commission.
But North Dimension Inc. also appears to have been a bogus online electronics retailer, according to an NBC News investigation. His site, now deactivated, is archived on the internet.
This is an SEC complaintagainst former Alameda CEO Caroline Ellison and former FTX co-founder Gary Wang said money wired to North Dimension by FTX customers for their own use ended up funding North Dimension’s business operations. Alameda and other Bankman-Fried businesses.
“Bankman-Fried had directed FTX to require clients to send funds to North Dimension in an effort to conceal the fact that the funds were being sent to an account controlled by Alameda,” the SEC said in the complaint. North Dimension’s website revealed no connection to Alameda, the regulator added.
The now decommissioned North Dimension website also did not mention any links to Bankman-Fried. Instead, the company claimed to sell cell phones, laptops and other similar items at the same Berkeley, Calif. address that housed FTX US. “Our vision is to become the most popular website for buying mobile phones and electronic devices by offering comprehensive product information and a seamless shopping process.” the North Dimension archived site said.
The north dimension was not Crazy Eddie of crypto. The website is full of spelling mistakes and weird product prices; For example, item listings sometimes displayed “sale” prices that were several hundred dollars higher than the normal price. And customers finding their way to the site may have struggled to buy products once they got there. Clicking on a laptop, for example, would generate this pop-up: “Free to send message. We collaborate with brands and ambitious people; we would like to build something big together.
It could not be determined why FTX or Bankman-Fried appear to have created a bogus online electronics retailer called North Dimension Inc. to which FTX customers were asked to send their money. A Bankman-Fried representative declined to comment.
Bankman-Fried was charged earlier this month and extradited from the Bahamas, where he has been locked up since his business went bankrupt in early November last week. He is under house arrest at his parents’ home in California after posting bail. His former colleagues Ellison and Wang pleaded guilty to federal fraud charges on Wednesday in the Southern District of New York.
“Eliminate counterfeits”
FTX Clients Sending Money to North Dimension Probably Wired It Silvergate Bank, the San Diego institution that is one of the largest financial services providers to the crypto industry. Dimension Nord Inc. held two bank accounts at Silvergate, FTX bankruptcy documents show.
Silvergate is under surveillance by Congress for its role as FTX’s primary banking partner. Last week, responding to a request for information from four senators, Silvergate said it was reviewing transactions in accounts held at the bank that were associated with FTX entities.
The bank performed “extensive due diligence on FTX and its related entities,” she told senators, “both during the onboarding process and through ongoing monitoring. We have a history of closing accounts that are being used for purposes other than intended. »
Silvergate Bank did not immediately respond to a request for comment on the due diligence it conducted on North Dimension or whether it visited its website to verify its operations. In the past, citing customer confidentiality, a Silvergate Bank representative declined to comment on specific cases. Silvergate is supervised by the Federal Reserve Board and its deposits are guaranteed by the Federal Deposit Insurance Corp.
The bank details on its website the types of due diligence it regularly performs on the entities it assists with banking services. These include a ‘site visit’ and an ‘organizational compliance culture review’.
North Dimension was incorporated in August 2020 in Delaware, records show, about a year and a half after FTX began operations. Its incorporation documents, along with those of a sister company called North Wireless Dimension, were drafted by Fenwick & West, the Seattle-based law firm that employed FTX Chief Regulatory Officer Daniel Friedberg, before joining the crypto empire. As NBC News reported, Friedberg was an executive at an online gambling software company that was rocked by a scandal in the early 2000s in which insiders of a poker website called Ultimate Bet could see the hands. other players and place winning bets accordingly.
The electronics retail website for North Dimension was established in November 2021 by an unidentified incumbent in Hong Kong, according to analysis by DomainTools, a leading website search service. In addition to advertising an “iPad 11” that the site identified as a cell phone (on sale for $899, previously $410), the website also announced a newsletter that customers could receive if they submitted their email addresses. “We build trust by eliminating counterfeits and helping our users make informed purchasing decisions,” the site says.
This fall, a month before the FTX crater, a second mysterious North Dimension site surfaced on the web. It carried a dot-org address, indicating that it was a nonprofit, although it identified itself as an established financial services firm.
The second north dimension website is sparse, with only two pages superimposed on a photo of a mountain range. The company provides “mature and stable fund management, liquidity and payment processing services,” it says. No address or contact details are provided.
An analysis by DomainTools shows that this North Dimension site was created on October 1st. 3, 2022, and registered in Ontario, Canada. “We bring the sophistication we all expect from traditional financial institutions to the cryptocurrency space,” the website says.
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