In order to recoup roughly $157.3 million, the bankrupt cryptocurrency exchange FTX has filed a lawsuit against former Salameda workers. Salameda is a Hong Kong-incorporated company connected to FTX that the company claims was run by Sam Bankman-Fried, the former CEO of the company.The complaint claims that Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong, and two corporations owned or controlled numerous firms that had accounts registered at FTX.com and FTX US, and that they fraudulently withdrew money in the days preceding FTX’s bankruptcy.
The defendants benefited from withdrawals that constitute preferential transfers and “are avoidable under the Bankruptcy Code,” according to the petition, during the Preference Period, which is the 90 days prior to the bankruptcy filing on November 11, 2022.According to the petition, the defendants rushed to remove funds and took use of their relationships with FTX employees to guarantee they would be given preference over other clients.
The FTX bankruptcy estate has attempted to recoup payments from linked parties previously.Bankman-Fried and his executives, his parents, FTX’s charity and life science divisions, as well as Bankman-Fried himself, have already been targeted.In addition, it is attempting to recover payments made to the similarly bankrupt Genesis Global Capital, which is controlled by CoinDesk’s parent company, Digital Currency Group.A bankruptcy lawyer claimed in January that FTX had recovered more than $5 billion in various assets.The bankruptcy team estimated that the corporation owes its clients $8.7 billion in June.
Additionally, the petition claims that Matthew Burgess used other FTX workers to “push out” some pending withdrawal requests from one of Michael Burgess’ FTX US exchange accounts while falsely claiming ownership of the account, according to messages on the messaging service Slack.Just a few hours before FTX stopped accepting withdrawals on November 8, 2022, the transactions were finished.On or after November 7, more than $123 million of the total $157.3 million (based on pricing as of August 31, 2023) were withdrawn.The transfers were made “with the intent to hinder, delay or defraud FTX US’s present or future creditors,” the lawsuit stated.
In order to be ready for his trial, which will begin on October 3, Bankman-Fried is now being held in custody.His effort to be released from prison before the proceedings began was rejected by an appeals court on Thursday.