According to the recent court filing, FTX, the bankrupt crypto exchange, has filed a lawsuit against former employees of Salameda, a Hong Kong-incorporated entity affiliated with FTX, to recover about $157.3 million.
The Hong Kong firm was said to be controlled by the former CEO and founder of the bankrupt FTX, Sam Bankman-Fried, who is currently behind bars awaiting trial.
The former employees are alleged to have participated in the fraudulent withdrawal of assets from FTX a few days before it filed for bankruptcy in November 2022.
The lawsuit alleged Michael Burgess, Matthew Burgess, Lesley Burgess (their mother), Kevin Nguyen, Darren Wong, and two companies, namely 3Twelve Ventures and BDK Consulting, that co-toll multiple assets on FTX.com and FTX.us for fraudulently withdrawing assets before the exchange filed for bankruptcy.
Three months before FTX filed for bankruptcy in 2022, the listed names benefitted from preferential withdrawals that allowed some customers to withdraw some of their assets before they filed for bankruptcy and “are avoidable under the Bankruptcy Code.”
According to the filing, the alleged personnel had connections with some FTX employees, which they exploited to ensure they were prioritized over other customers.
According to FTX, the defendant rushed to their connections to withdraw their funds, which are currently worth more than $123 million of the total $157.3 million on its own on the exchange on or after Nov. 7 before the withdrawal window closed.
The lawsuit stated that the withdrawals were made “with the intent to hinder, delay, or defraud FTX US’s present or future creditors.”
FTX Recovery Attempts as they had recovered more than $5 billion in different assets
FTX has been actively pursuing the recovery of owed payments from various affiliated parties, marking this as not their initial endeavor in this pursuit.
In June, the company disclosed a substantial debt of $8.7 billion to its customers. In a concerted effort to offset this, the company managed to reclaim $7 billion in liquid assets. During the same period, FTX complained to the Wilmington, Delaware bankruptcy court, seeking the return of $700 million that its founder, Sam Bankman-Fried, had transferred to K5 entities in 2022.
FTX contended that Bankman-Fried, following his attendance at a social event hosted by Michael Kives, a co-owner of K5 Global, was characterized as an excessive benefactor, sending millions to K5 Global and its affiliated entities.
The company has also targeted not only FTX’s founder and former CEO, Sam Bankman-Fried but also his executives and parents, as well as FTX’s philanthropic and life science divisions.
Recently, FTX leveled allegations against the parents of the FTX founder, Joseph Bankman, and Barbara Fried, both law professors at Stanford Law School, accusing them of leveraging their legal expertise to divert funds.
Also in september, the collapsed crypto exchange secured court approval to liquidate, invest, and hedge $3.4 billion worth of cryptocurrency holdings in order to settle its outstanding debts.
According to the court filing, FTX owns $1.16 billion worth of Solana (SOL) tokens, worth more than one-third of the company’s total $3.4 billion liquid crypto portfolio. Its next largest crypto stash, Bitcoin (BTC), is worth $560 million based on pricing as of Aug. 31. Ether (ETH) comes in at a distant third, worth $196 million.
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