The now-defunct FTX has reportedly sued the former staff of Salameda, an entity based out of Hong Kong and one that was affiliated with the crypto exchange, for $157.3 million, as per a court filing on September 21, 2023. According to the filing, FTX has claimed that the affiliated entity was under the direct control of its former CEO Sam Bankman-Fried.
The filing accuses Lesley Burgess, her two sons Michael and Mathew Burgess, Darren Wong, and Kevin Nguyen, and two firms controlled by other companies – which had registered accounts with FTXUS and FTX.com – of fraudulently withdrawing assets.
Around 90 days ahead of November 11, 2022, when FTX filed for bankruptcy, the defendants allegedly received the benefit of withdrawals that are termed as alleged preferential transfers, according to the filing. The filing stated that such transfers are “avoidable” under the bankruptcy law. It is alleged that the defendants rushed to withdraw their assets by manipulating their contacts at FTX so that they could be prioritized over other customers of the exchange.
The lawsuit isn’t the first time that FTX has tried to seek payments from related parties. In the past, the exchange’s bankruptcy estate has targeted Bankman-Fried, his executive, and his parents along with the FTX’s life science and philanthropic arms.
The estate is also trying to claim payments given out to Genesis Global Capital, another bankrupt crypto business that is owned by Digital Currency Group. Earlier in January this year, a bankruptcy attorney had claimed that FTX had reclaimed over $5 billion in various assets. In June, FTX’s bankruptcy estate stated that the exchange owed its clients $8.7 billion.
Citing messages exchanged on the communications app Slack, the filing alleged that Matthew Burgess sought help from other FTX staff to process pending withdrawal requests from his brother’s FTX US exchange accounts, while misrepresenting it as his own.
The transfers were wrapped up barely hours before FTX halted all withdrawals on November 8, 2022. The defendants withdrew over $123 million of the $157.3 million held by them in FTX accounts on or after November 7, 2022. The filing alleged that the transfers were made with the intention of hindering, delaying, or defrauding present and future creditors of FTX US.
The transfers were wrapped up barely hours before FTX halted all withdrawals on November 8, 2022. The defendants withdrew over $123 million of the $157.3 million held by them in FTX accounts on or after November 7, 2022. The filing alleged that the transfers were made with the intention of hindering, delaying, or defrauding present and future creditors of FTX US.
Until it went bankrupt last year, FTX was among the most trusted sources for updates on the Top 10 cryptocurrencies and live cryptocurrency prices.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
