FTX Sues SBF and Other Former Execs to Recover Over $1 Billion (Report)

FTX Trading has reportedly filed a lawsuit against the former CEO of the exchange Sam Bankman-Fried (SBF), and some people from his inner cycle to recoup more than $1 billion, which they supposedly misappropriated before the company’s demise. 

Numerous regulators and fallen investors have accused the previous management team of the marketplace of orchestrating a gigantic crypto scam that eventually resulted in multi-billion losses. FTX Trading agreed with the assumption, maintaining that it was “one of the largest financial frauds in history.”

Firing More Shots at SBF 

The legal issues for the disgraced founder of FTX – Bankman-Fried – are piling up, with the latest accusation coming from the new team behind FTX Trading. 

In a recent complaint filed in Delaware bankrupt court (seen by The Economic Times), he was accused of swindling over $1 billion in customer funds between February 2020 and November 2022 (the time when the exchange filed for bankruptcy protection).

FTX Trading further claimed that Caroline Ellison (who was the leader of Alameda Research), Zixiao “Gary” Wang (former FTX technology executive), and Nishad Singh (ex-engineering director) also had a hand in the matter.

According to the complaint, SBF and his inner cycle used the money to finance political campaigns, purchase luxury apartments, engage in speculative investments, and fund other “pet projects.”

FTX Trading claimed that the fraudulent transfers included over $725 million of equity that the once-leading crypto platform and West Realm Shires awarded “without receiving any value in exchange.”

SBF and Wang allegedly misappropriated $546 million to purchase Robinhood shares, whereas Ellison used almost $29 million to pay herself bonuses. 

John Ray Thinks FTX Misused Clients’ Funds Since Day One

The current CEO and Chief Restructuring Officer of FTX – John J. Ray III – has been quite a critic of the previous management crew of the exchange. 

He claimed last month that the company commingled customer deposits from the get-go in 2019 while former employees lied to banking institutions about using Alameda Research as a trading firm for transactions. 

“The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage. From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds and misused them with abandon at the direction and by the design of previous senior executives,” Ray argued.

The American also maintained that the former crypto giant owed users $8.7 billion in November 2022. He concluded that the current management team has shrunk that debt, recovering $7 billion in liquid assets so far.