In a legal showdown that continues to unravel the tumultuous world of crypto, FTX, the now-bankrupt crypto exchange, has launched a lawsuit against former employees of Salameda, a Hong Kong-incorporated entity with ties to FTX. The lawsuit seeks to recover a staggering $157.3 million.
The allegations put forth in the filing accuse a group of individuals, including Michael Burgess, Matthew Burgess, Lesley Burgess, Kevin Nguyen, Darren Wong, and two associated companies, of orchestrating a scheme involving FTX accounts.
During the 90 days leading up to the exchange’s bankruptcy filing on November 11, 2022, known as the Preference Period, the defendants are alleged to have benefited from withdrawals deemed preferential transfers that are subject to scrutiny under the Bankruptcy Code.
The filing asserts that these individuals raced to withdraw assets and leveraged their connections within the exchange to ensure preferential treatment over other clients.
FTX Lawsuit: Slack Messages as Evidence
Messages exchanged on the communication platform Slack are cited as evidence in the lawsuit, suggesting that Matthew Burgess enlisted fellow FTX employees to expedite specific withdrawal requests while falsely representing an account as his own.
Notably, these transfers were executed mere hours before the exchange ceased withdrawals on November 8, 2022, with over $123 million of the $157.3 million withdrawn on or after November 7. The lawsuit contends that these actions were undertaken with the intent to hinder, delay, or defraud FTX US’s current or future creditors.
Recently, a lawsuit has been leveled against the parents of Sam Bankman-Fried, the founder of FTX Trading. This lawsuit alleges that Allan Joseph Bankman and Barbara Fried used their influence over their son to divert substantial sums from the beleaguered company.
The suit further claims that Bankman directed over $5.5 million in charitable contributions from the exchange to Stanford University, where he serves as a law professor. These contributions are characterized as “naked self-dealing” aimed at benefiting Stanford at the expense of FTX Group.
In response, Stanford University has announced its intention to return the funds obtained from gifts originating from FTX and related entities. A spokesperson for the university clarified that these funds were primarily earmarked for pandemic-related prevention and research efforts.
The university is presently engaged in discussions with the exchange debtors’ attorneys regarding the return of these contributions, although the precise monetary value remains undisclosed.