- FTX has filed a lawsuit against founder Sam Bankman-Fried and former executives for allegedly misappropriating over $1 billion before FTX’s bankruptcy
- The complaint accuses the defendants of funding personal projects, luxury condos, and political contributions
- The alleged fraudulent transfers occurred between February 2020 and November 2022 and can be invalidated under bankruptcy laws
If you thought all the charges that could be laid against Sam Bankman-Fried and his cohorts had been laid, think again; FTX has filed a lawsuit against Bankman-Fried and other former executives seeking to recover over $1 billion they allegedly misappropriated before FTX’s bankruptcy. The execs, including former Alameda Research CEO Caroline Ellison and former FTX technology chief Zixiao “Gary” Wang, have been accused of misusing funds for personal gain, financing luxury condominiums, making political contributions, engaging in speculative investments, and funding other “pet projects.”
More Fraud Charges Against Top FTX Execs
According to the filing, made yesterday, Bankman-Fried, Ellison, Wang and others perpetrated one of the largest frauds in history between February 2020 and November 2022, which culminated in FTX’s Chapter 11 bankruptcy filing. FTX claimed that these transfers can be invalidated, or “avoided,” under the U.S. bankruptcy code or Delaware law.
FTX’s complaint alleges that the fraudulent transfers included more than $725 million of equity awarded by FTX and West Realm Shires, an entity controlled by Bankman-Fried, “without receiving any value in exchange.” Additionally, it claims that Bankman-Fried and Wang misappropriated $546 million to purchase shares of Robinhood Markets, Ellison used $28.8 million to pay herself bonuses, and some of Bankman-Fried’s criminal defense expenses were funded from a $10 million “gift” he gave to his father.
No Comment, Yet
FTX asserts that these transfers were executed while FTX-related entities were insolvent, and the defendants were aware of the financial situation. According to federal law, bankruptcy trustees have the authority to invalidate property transfers made within two years before Chapter 11 filings, if the transfers were made for less than their value and with an intent to defraud a bankruptcy estate.
No representatives of the defendants have yet commented on these additional charges which come on top of criminal charges against the highest-ranking members of the FTX board. Bankman-Fried has pleaded not guilty to all charges whereas Ellison and Wang have struck plea deals in order to turn state’s witness against the former CEO.