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FTX Sues SBF, Former Execs to Recover Over $1 Billion

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KEBB | Official ₿itcoin News
FTX Sues SBF, Former Execs to Recover Over $1 Billion

Crypto exchange FTX is trying to regain $1 billion in a lawsuit against founder Sam Bankman-Fried (SBF) and some former executives. FTX’s new management argues the funds were misappropriated through dubious deals and transactions made before the coin trading platform went bankrupt last fall.

Failed Crypto Firm FTX Files New Lawsuit Against Founders and Chiefs

FTX Trading, the company which operated what was one of the largest crypto exchanges, sued its founder Sam Bankman-Fried and other former executives on Thursday in an attempt to recover more than $1 billion they allegedly diverted.

Besides Bankman-Fried, among the defendants named in the suit are co-founder and former FTX Chief Technology Officer Gary Wang, former CEO of SBF’s Alameda Research hedge fund Caroline Ellison, and former FTX Engineering Director Nishad Singh, Reuters and Bloomberg reported.

The complaint filed in U.S. Bankruptcy Court, District of Delaware, accuses them of misappropriating and using the money to finance luxury condominiums, political contributions, speculative investments, and other “pet projects.”

The transfers took place between February 2020 and November 2022, when the company sought Chapter 11 protection. According to FTX, these transfers can be reversed under the U.S. Bankruptcy Code or Delaware law as they were made before the bankruptcy filing on Nov. 11.

The lawsuit alleges that the fraudulent transactions included over $725 million of equity that FTX and West Realm Shires, another entity controlled by SBF, awarded “without receiving any value in exchange.” Bankman-Fried and Wang also took $546 million from Alameda in May 2022 to acquire shares in Robinhood Markets, and Ellison used $28.8 million to pay herself bonuses. FTX pointed out:

The transfers were made when [FTX-related entities] were insolvent, and defendants knew it.

Following his extradition from the Bahamas, where FTX was headquartered, SBF was sued for alleged fraud in the United States, among other criminal charges to which he has pleaded not guilty. Ellison, Wang, and Singh pleaded guilty and agreed to cooperate with prosecutors.

In the latest complaint, FTX also claims that Sam Bankman-Fried’s defense is being partially funded from a $10 million “gift” he gave his father. This and the other lawsuits are part of efforts by the bankrupt company’s new CEO, John Ray, and his team to recoup funds that can repay creditors, including customers of the collapsed cryptocurrency exchange.

Do you think FTX’s new management will recover the funds allegedly misappropriated by its former executives? Share your thoughts on the case in the comments section below.

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