The bankrupt cryptocurrency exchange FTX has sued its
founder and former Chief Executive Officer Sam Bankman-Fried in an attempt to
recover USD $1 billion. The funds are part of a larger sum of money allegedly
misappropriated prior to the collapse of the company.
Additionally, the
lawsuit, which was filed before a bankruptcy court in Delaware, mentioned
Caroline Ellison, the former Chief Executive Officer of Alameda Research,
Zixiao Gary Wang, FTX’s former Chief Technology Officer, and Nishad Singh, the
company’s former Engineering Director as defendants in the lawsuit.
Ellison, Wang, and Singh
have since surrendered themselves to the authorities and pleaded guilty to
accusations including conspiracy to commit fraud and money laundering and
violation of campaign finance laws. However, Bankman-Fried pleaded
not guilty to all the
charges related to the collapse of FTX in January and is set to face trial in
October.
The FTX’s lawyers have accused the defendants of allegedly using money to fund political parties, acquire luxurious real estate properties, and invest in speculative trading. According to the document filed before the court, the alleged fraudulent activities were committed between February 2020 and November 2022, when FTX declared bankruptcy.
Besides that, the
lawsuit accused the defendants of failing to observe good corporate governance
and putting their personal goals and aspiration ahead of that of the exchange.
Additionally, the lawsuit highlighted a lack of effective corporate controls in
FTX.
Additional Accusations
“The defendants
created an environment in which a handful of employees had virtually limitless
power to direct transfers of fiat currency and cryptocurrency and to hire and
fire employees with no effective oversight and no checks on how they exercised
those broad powers,” FTX explained.
Finance Magnates
reported yesterday (Thursday) that the FTX’s bankruptcy lawyers were planning
to recover USD $71
million invested by the defunct exchange in life sciences companies. The lawyers said that the donations were not driven by philanthropic intentions but to gain Bankman-Fried
political influence and goodwill. Moreover, the bankruptcy team is planning
to recover USD $323
million paid to the leadership of FTX Europe.
Meanwhile, reports
emerged…
