FTX has taken legal action against its former CEO, Sam Bankman-Fried, and other key executives from the now-bankrupt crypto exchange. The lawsuit aims to recover over $1 billion in funds that are allegedly misappropriated. Let’s take a closer look.
TL;DR:
FTX filed a complaint in a US Bankruptcy Court on July 20.
FTX have accused former executives, including Sam Bankman-Fried, of misappropriating over $1 billion in customer funds.
Allegations include financing luxury properties, political contributions, speculative investments, and issuing equity to themselves without value in return.
FTX Takes Legal Action Against Sam Bankman-Fried and Former Executives: Alleged $1 Billion Misappropriation
FTX filed the complaint in a United States Bankruptcy Court on July 20. The lawsuit names Sam Bankman-Fried, along with former Alameda Research CEO, Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, and former FTX engineering director, Nishad Singh, as defendants. Moreover, FTX accuses these former executives of breaching their fiduciary duties. Allegedly, by continuously misappropriating customer funds. The alleged misuse involved financing luxury condominiums, political and so-called “charitable” contributions, speculative investments, and personal pet projects.
Additionally, the lawsuit claims that these former executives, including Sam Bankman-Fried, abused their authority over FTX and its related companies. Markedly, to perpetrate one of the largest financial frauds in history. The allegations further state that they issued over $725 million worth of equity to themselves. This was without providing any value in return to the company.
FTX also accuses Sam Bankman-Fried and Zixiao “Gary” Wang of misappropriating an additional $546 million. Apparently, they used the funds to buy shares in the popular trading platform, Robinhood. Meanwhile, Caroline Ellison is accused of paying herself $28.8 million in bonuses and investing $10 million of those funds in an artificial intelligence company. Finally, the lawsuit reveals that Bankman-Fried transferred $10 million from his FTX US account to his father’s account on the same exchange, claiming it as a “gift” on January 24, 2022.
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Emily Neale
Emily is from the UK, currently living in Dubai. She’s fallen in love with web3 for its potential, innovation, and the opportunity it provides to connect with others around the world. Emily enjoys travel, reading, and good food.
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