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FTX, the bankrupt cryptocurrency alternate, has sued its founder Sam Bankman-Fried and three different former executives to claw again greater than $1bn they allegedly misappropriated within the months main as much as its collapse final yr.
The lawsuit — filed by FTX under the direction of an govt group led by restructuring skilled John Ray — takes intention at a litany of share awards, actual property purchases, money transfers and different transactions that the corporate says needs to be reversed underneath chapter legislation.
Among the many alleged beneficiaries of the transactions described within the lawsuit are Caroline Ellison, the previous head of FTX’s buying and selling arm Alameda Analysis. In a single incident listed within the grievance, Ellison allegedly paid herself a bonus of $22.5mn, a part of which was later transferred to a private checking account and subsequently used to take a position hundreds of thousands of {dollars} in an organization centered on synthetic intelligence analysis.
Zixiao “Gary” Wang, a co-founder of FTX, and Nishad Singh, who labored at FTX and Alameda, are additionally named within the grievance as beneficiaries of allegedly illicit transfers.
Ellison, Wang and Singh have pleaded guilty to costs together with fraud in felony instances unrelated to Thursday’s lawsuit. Bankman-Fried has pleaded not guilty to US felony costs together with fraud, cash laundering and marketing campaign finance violations.
Thursday’s FTX lawsuit opens a brand new entrance in Ray’s efforts to reclaim belongings that he says rightfully belong to collectors of the crypto alternate. Amongst them are hundreds of particular person clients who misplaced entry to their belongings when FTX suspended withdrawals final yr.
The corporate filed for chapter in November. Quickly afterwards Ray, who beforehand oversaw the liquidation of Enron, said that he had by no means earlier than seen “such a whole failure of company controls and such a whole absence of reliable monetary info”.
Most of the failings that Ray recognized then play a central function within the lawsuit filed in Delaware chapter courtroom.
FTX entities “didn’t put together monetary statements of any sort”, in accordance with the grievance, whereas others relied on QuickBooks, an accounting software program package deal meant for small companies, or “a hodgepodge of Google paperwork, Slack communications, [and] shared drives”.
Attorneys for the defendants didn’t instantly return requests for remark.
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