FTX Files a Lawsuit Against SBF and Other Execs: Details
- FTX co-founder Sam Bankman-Fried, along with other execs have been sued by the crypto exchange.
- The lawsuit filed on July 20 named SBF, Zixiao “Gary” Wang, Caroline Ellison, and Nishad Singh as defendants.
- The complaint adds that a few employees at the bankrupt firms had access to limitless power.
- The powerful employees hired and fired people at will and had access to transactions in fiat and crypto.
Bankrupt crypto exchange FTX has sued its founder and former CEO, Sam Bankman-Fried, also known as SBF in the crypto space, along with other executives. Moreover, former executives of a trading firm also founded by SBF, Alameda Research, including Caroline Ellison, have been sued. Meanwhile, the former crypto billion is facing multiple charges in the United States, ranging from committing fraud to misleading investors.
As per a complaint filed on July 20 in a United States Bankruptcy Court, former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, former engineering director at the exchange Nishad Singh, and Bankman-Fried have been named as defendants. This adds to the numerous cases that the executives have been facing.
According to the complaint, the FTX and Alameda executives breached their fiduciary duties by allegedly mismanaging the funds that their users entrusted to them on a “continuous basis to finance luxury condominiums, political and ‘charitable’ contributions, speculative investments, and other pet projects.”
The legal brief also adds that the prominent personalities in the crypto space used their control over FTX and Alameda to commit “one of the largest financial frauds in history.” The complaint adds that a few employees at the bankrupt firms had access to limitless power, which allowed them to oversee transactions involving digital assets and fiat currencies.
Moreover, these powerful employees also had the power to hire and fire employees with “no effective oversight” on how they exercised their powers. Interestingly, FTX also noted in the complaint that SBF and others issued more than $725 million worth of equity to themselves, “without [debtors] receiving any value in exchange.”
FTX claims that on Jan. 24, 2022, SBF transferred close to $10 million to his father’s account on FTX US in the form of a “gift.” Moreover, his father also made six transfers totaling $6.75 million to his personal accounts at Morgan Stanley and TD Ameritrade, the lawsuit claims.
“In or around July 2019, Bankman-Fried directed one or more of his co-conspirators or individuals working at their behest to modify the software to permit Alameda to maintain a negative balance in its account on the exchange.”
As earlier reported by Bitnation, the bankrupt crypto exchange also filed another lawsuit against the executives in May this year, aiming to claw back $220 million they spent to acquire the stock trading platform Embed. The lawsuit claims that former executives failed to conduct any due diligence before purchasing the largely ineffective, buggy software platform.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
