Failed crypto exchange FTX sues former CEO Sam Bankman-Fried to recover more than $1 billion

Failed cryptocurrency exchange FTX has filed a case in the Delaware bankruptcy court against founder Sam Bankman-Fried and other former executives in a bid to recover over $1 billion that was allegedly misappropriated before the company went bankrupt. 

Apart from Bankman-Fried, FTX has sued co-founder and former chief technology officer Gary Wang, former director of engineering Nishad Singh, and co-chief executive of Alameda Research LLC Caroline Ellison. 

Also Read: Senior Attorney Helped FTX Founder Misuse Customer Funds, Report Says

FTX alleges that the former executives made numerous fraudulent transfers that helped them personally but did nothing for the company. The lawsuit alleges Bankman-Fried and Wang took out sham loans from Alameda that did not require them to provide any collateral and carried below-market interest rates with only Ellison's approval.

The exchange alleges that Bankman-Fried and Wang misappropriated $546 million in May 2022 to acquire shares of Robinhood Markets Inc. Ellison has also been alleged to have used $28.8 million to pay herself bonuses.

In the lawsuit, FTX argued that the defendants continuously misappropriated funds to finance luxurious lifestyles, political contributions and speculative investments, while perpetrating 'one of the largest frauds in history'.

Also Read: US charges FTX's Bankman-Fried with paying $40 mln Chinese bribe

In a shocking revelation, FTX claims that Bankman-Fried's criminal is being funded by a $10 million dollar ‘gift’ he gave his father Joe Bankman. Most of the $10 million gift was charged from FTX and routed towards Bankman-Fried's Morgan Stanley and TD Ameritrade accounts sometime around January last year, reported CNBC.

The failed exchange claims that the alleged transfers took place between February 2020 and November 2022, when FTX filed for Chapter 11 protection. The company noted that these transactions can be reversed or 'avoided' under US bankruptcy law.

(With inputs from agencies)