{"id":20130,"date":"2023-07-21T02:13:31","date_gmt":"2023-07-21T02:13:31","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/ftx-sues-sam-bankman-fried-and-other-former-execs-to-claw-back-1b\/"},"modified":"2023-07-21T02:13:33","modified_gmt":"2023-07-21T02:13:33","slug":"ftx-sues-sam-bankman-fried-and-other-former-execs-to-claw-back-1b","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/ftx-sues-sam-bankman-fried-and-other-former-execs-to-claw-back-1b\/","title":{"rendered":"FTX sues Sam Bankman-Fried and other former execs to claw back $1B"},"content":{"rendered":"
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FTX has sued former CEO Sam Bankman-Fried and other former key executives from the now-bankrupt crypto exchange to recover more than $1 billion in allegedly misappropriated funds.\u00a0<\/p>\n

A July 20\u00a0complaint filed in a United States Bankruptcy Court named former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao \u201cGary\u201d Wang, former FTX engineering director Nishad Singh and Bankman-Fried as defendants.\u00a0<\/p>\n

In the lawsuit, FTX claimed the former executives breached their fiduciary duties by allegedly misappropriating customer funds on a \u201ccontinuous basis to finance luxury condominiums, political and \u2018charitable’ contributions, speculative investments and other pet projects.\u201d<\/p>\n

Excerpt from FTX’s complaint against Bankman-Fried, Ellison and others. Source: Kroll<\/em><\/figcaption><\/figure>\n

Additionally, the lawsuit alleged they \u201cabused their control\u201d over FTX and its related companies to commit \u201cone of the largest financial frauds in history.\u201d<\/p>\n

Defendants created an\u00a0environment in which a handful of employees had \u201cvirtually limitless power\u201d to oversee transfers of fiat and crypto assets, as well as granting themselves the power to hire and fire employees with \u201cno effective oversight\u201d on how they exercised these powers, the suit claimed.<\/p>\n

Additionally, FTX alleged the former executives issued more than $725 million worth of equity to themselves, \u201cwithout [debtors] receiving any value in exchange.\u201d<\/p>\n

FTX claimed Bankman-Fried and Wang also misappropriated an additional $546 million to purchase shares in the trading platform Robinhood. <\/p>\n

The filing alleged Ellison paid herself $28.8 million in bonuses and used $10 million of the funds to purchase a stake in an artificial intelligence company. <\/p>\n

FTX also alleged that on Jan. 24, 2022, Bankman-Fried transferred $10 million as a \u201cgift\u201d from his FTX US account to his father’s account on the same exchange.<\/p>\n

Related: Terraform Labs seeks access to FTX wallets in fraud defense<\/em><\/strong><\/p>\n

Shortly afterward, Bankman-Fried\u2019s father made six transfers totaling $6.75 million to his personal accounts at Morgan Stanley and TD Ameritrade, the filing asserts. FTX claimed this \u201cgift\u201d is being used to fund Bankman-Fried\u2019s legal defense.\u00a0<\/p>\n

FTX said many of the alleged fraudulent transfers occurred while the exchange was insolvent, something it said the defendants were acutely aware of. While FTX initially prohibited accounts carrying a negative balance, Bankman-Fried allegedly directed his associates to modify the exchange\u2019s code.<\/p>\n

\u201cIn or around July 2019, Bankman-Fried directed one or more of his co-conspirators or individuals working at their behest to modify the software to permit Alameda to maintain a negative balance in its account on the exchange.\u201d<\/p><\/blockquote>\n

Due to this alteration, FTX was capable of maintaining standard operations while running \u201cvery large deficits.\u201d By March 2022, Ellison \u201cprivately estimated that the FTX exchange had a cash deficit alone of more than $10 billion,\u201d the filing added.<\/p>\n

The crypto exchange and its subsidiaries are now headed by restructuring chief and CEO John Ray after it filed for Chapter 11 bankruptcy on Nov. 11, 2022. <\/p>\n

Hall of Flame: Wolf Of All Streets worries about a world where Bitcoin hits $1M<\/em><\/strong><\/p>\n