The cryptocurrency exchange FTX has filed a massive lawsuit against its former CEO, Sam Bankman-Fried, and several other key executives, seeking to recover over $1 billion in allegedly misappropriated funds.
The complaint, lodged in a United States Bankruptcy Court on July 20, names ex-Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, and former FTX engineering director Nishad Singh as defendants.
The lawsuit paints a disturbing picture of fiduciary duty breaches and financial fraud, accusing the defendants of diverting customer funds for personal gains.
These misused funds were purportedly funneled into lavish condominiums, political and “charitable” contributions, speculative investments, and other pet projects.
A glaring flaw in the company’s internal structure allowed a select group of employees to wield near-unlimited power over asset transfers and employment decisions without any practical oversight.
Shockingly, the former executives granted themselves more than $725 million in equity without providing any value in return to the company.
The lawsuit also accuses Bankman-Fried and Wang of misappropriating an additional $546 million to invest in shares of the popular trading platform Robinhood.Â
Furthermore, Ellison is alleged to have granted herself hefty bonuses, using a significant portion of the funds to purchase a stake in an artificial intelligence company.
A bizarre incident occurred in January 2022 when Bankman-Fried transferred $10 million as a “gift” from his FTX US account to his father’s account on the same exchange.
Subsequently, his father made several transfers totaling $6.75 million to his accounts at Morgan Stanley and TD Ameritrade, with FTX claiming that this money was being used to finance Bankman-Fried’s legal defense.
Also Read: FTX Aims $71M Recovery from Philanthropy & Life Science Arms
FTX’s operations are now under the leadership of restructuring chief and CEO John Ray, following the Chapter 11 bankruptcy filing on November 11, 2022.
