FTX Sues Sam Bankman-Fried and Other Executives, Seeking Over $1 Billion

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Bankrupt cryptocurrency exchange FTX is suing its founder Sam Bankman-Fried and three other former executives for allegedly embezzling more than $1 billion in the months before its collapse last year.

The lawsuit — filed by FTX under the direction of an executive team led by restructuring specialist John Ray — targets share awards, real estate purchases, cash transfers and other transactions that the company says should be reversed under bankruptcy law.

The alleged beneficiaries of the transactions described in the lawsuit include Carolyn Ellison, the former head of Alameda Research, the trading arm of FTX. In one incident listed in the complaint, Ellison allegedly gave himself a $22.5 million bonus, part of which was later transferred to a personal bank account and later invested millions of dollars in a company focused on artificial intelligence research. Went.

FTX co-founder Zixiao “Gary” Wang and Nishad Singh, who worked at FTX and Alameda, are also named in the complaint as beneficiaries of the alleged illegal transfers.

Ellison, Wang and Singh have pleaded guilty to charges including fraud in criminal counts related to Thursday’s trial. Bankman-Fried has pleaded not guilty to US criminal charges including fraud, money laundering and campaign finance violations.

Thursday’s FTX lawsuit opens a new front in Ray’s efforts to reclaim assets he says are rightfully held by the crypto exchange’s creditors. These include thousands of individual clients who lost access to their assets when FTX suspended withdrawals last year.

The company filed for bankruptcy in November. Soon afterwards Ray, who had previously overseen the liquidation of Enron, said that he had never seen “such a complete failure of corporate control and such a complete absence of reliable financial information”.

Several of the failures identified by Ray play a central role in the lawsuit filed in Delaware bankruptcy court.

According to the complaint, the FTX entities “didn’t prepare any kind of financial statement,” while others relied on QuickBooks, an accounting software package for small businesses, or “a bunch of Google documents, Slack communications, (and) shared drives.”

Lawyers for the defendants did not immediately respond to requests for comment.