FTX Trading is suing founder Sam Bankman-Fried and other former executives of the cryptocurrency exchange, seeking to recover more than $1 billion they allegedly embezzled before FTX went bankrupt.
FTX Sues $1 Billion for Sam Bankman-Fried And Others
Caroline Ellison, who manages Bankman-Fried's Alameda Research hedge fund in the lawsuit filed in Delaware bankruptcy court; Zixiao “Gary” Wang, FTX's former chief of technology; and former FTX engineering director Nishad Singh were cited as defendants.
FTX said the defendants repeatedly misused funds to finance luxury condos, political contributions, speculative investments and other pet projects, committing one of the largest financial scams in history.
FTX stated that the alleged fraudulent transfers occurred between February 2020 and November 2022, when FTX filed for Chapter 11 protection, and can be reversed or “prevented” under US bankruptcy law or Delaware law.
FTX is currently run by John Ray, who helped run Enron after the energy investor went bankrupt in 2001.
US prosecutors have named Bankman-Fried the mastermind of a fraud that led to the collapse of FTX, which included the embezzlement of billions of dollars in client funds.
Bankman-Fried pleaded not guilty to various charges. Ellison, Wang and Singh pleaded guilty and agreed to cooperate with prosecutors.
The fraudulent transfers included more than $725 million in equity from FTX and West Realm Shires, a Bankman-Fried-controlled entity, “without any value in return,” according to Thursday's complaint.
FTX revealed that Bankman-Fried and Wang also embezzled $546 million to buy shares in Robinhood Markets, while Ellison used $28.8 million to pay him bonuses.
It was also stated that part of Bankman-Fried's criminal defense was financed by a $10 million “gift” he gave to his father.
“Transfers were made while they were in bankruptcy and the defendants knew about it,” FTX said.
*Not investment advice.
