FTX Trading Ltd, the bankrupt cryptocurrency exchange, has filed a lawsuit against its founder, Sam Bankman-Fried, and three other former executives, seeking to reclaim over $1 billion that it alleges they misappropriated in the months leading up to its collapse last year.
The lawsuit, filed by FTX under the leadership of a restructuring team headed by John Ray, targets a litany of stock allocations, property purchases, money transfers, and other transactions that the company believes should be undone under bankruptcy law.
Among the alleged beneficiaries of the transactions described in the lawsuit is Caroline Ellison, the former head of FTX’s trading division, Alameda Research. According to the complaint, Ellison reportedly paid herself a $22.5 million bonus, a portion of which was later transferred to a personal bank account and subsequently used to invest millions of dollars in an artificial intelligence research company.
Zixiao “Gary” Wang, a co-founder of FTX, and Nishad Singh, who worked at FTX and Alameda, are also named as beneficiaries of allegedly illegal transfers in the lawsuit.
Ellison, Wang, and Singh have previously pleaded guilty to criminal fraud charges unrelated to Thursday’s lawsuit. Bankman-Fried has pleaded not guilty to various US criminal charges, including fraud, money laundering, and campaign finance violations.
FTX’s lawsuit on Thursday opens a new front in Ray’s efforts to reclaim assets that he believes rightfully belong to the creditors of the crypto exchange, including thousands of individual customers who lost access to their funds when FTX halted withdrawals last year.
The company filed for bankruptcy in November, and soon after, Ray, who previously oversaw the liquidation of Enron, stated that he had never before seen “such a complete failure of corporate controls and such a complete lack of trustworthy financial information.”
Many of the deficiencies identified by Ray then play a central role in the lawsuit, which was filed in the Delaware bankruptcy court.
According to the complaint, FTX companies “did not prepare any financial reports” while others relied on QuickBooks, an accounting software package for small businesses, or a “hodgepodge of Google documents, Slack communications, [and] shared drives.”
The defendants’ attorneys did not immediately respond to requests for comment.
Referenz: Financial Times