FTX sues Bankman-Fried, others to recoup more than $1.3 billion

NEW YORK – FTX Trading on Thursday sued founder Sam Bankman-Fried and other former executives at the cryptocurrency exchange, seeking to recoup more than US$1 billion (S$1.3 billion) they allegedly misappropriated before

FTX went bankrupt.

The latest complaint filed on Thursday in FTX’s ongoing bankruptcy process also names as defendants Caroline Ellison, who led Bankman-Fried’s Alameda Research hedge fund; former FTX technology chief Gary Wang; and former FTX engineering director Nishad Singh.

FTX said the defendants continually misappropriated funds to finance luxury condominiums, political contributions, speculative investments and other “pet projects” while committing “one of the largest financial frauds in history”.

The alleged fraudulent transfers occurred between February 2020 and November 2022 when FTX filed for Chapter 11 protection, and can be undone – or “avoided” – under the United States bankruptcy code or Delaware law, FTX said.

A spokesman for Bankman-Fried declined to comment. Lawyers for the other defendants did not immediately respond to requests for comment.

US prosecutors have said that Bankman-Fried is the mastermind of a fraud that led to FTX’s collapse and included the misappropriation of billions of dollars of customer funds.

The complaint also revealed that Alameda Research’s Ellison estimated there was a more than US$10 billion cash deficit at FTX.com about eight months before the crypto exchange collapsed. She made the estimate in March 2022 in a private note. The filing also alleged that FTX executives and Ellison in August 2022 privately estimated that FTX.com owed customers more than US$8 billion in fiat currency that “it could not repay”.

Bankman-Fried has pleaded not guilty to several criminal charges. Ellison, Wang and Singh have pleaded guilty and agreed to cooperate with prosecutors. REUTERS, BLOOMBERG