FTX Sues Former Employees for $157.3 Million
FTX, the bankrupt crypto exchange, has filed a lawsuit against former employees of Salameda, an affiliated entity, seeking to recover $157.3 million. Salameda was controlled by Sam Bankman-Fried, the former CEO of FTX who is currently awaiting trial in prison.
Fraudulent Asset Withdrawal Allegations
The lawsuit claims that the former employees participated in fraudulent asset withdrawals from FTX just days before it filed for bankruptcy in November 2022. The individuals named in the lawsuit, along with two companies, are accused of fraudulently withdrawing assets from FTX.com and FTX.us.
Preferential Withdrawals and Exploitation of Connections
According to the court filing, these individuals benefited from preferential withdrawals three months before FTX filed for bankruptcy. They allegedly used their connections with FTX employees to prioritize their own withdrawal requests over other customers.
Intent to Hinder Creditors
The lawsuit alleges that the withdrawals were made with the intention to hinder, delay, or defraud FTX’s present or future creditors. The total value of the withdrawn assets is claimed to be $123 million out of the $157.3 million sought for recovery.
FTX’s Recovery Efforts
This is not FTX’s first attempt at recovering owed payments. The company previously disclosed a debt of $8.7 billion and managed to reclaim $7 billion in liquid assets. It has also sought the return of $700 million transferred by its founder to K5 entities.
Targeting Executives and Parents
In addition to pursuing its founder and former CEO, FTX has targeted his executives, parents (both law professors at Stanford Law School), and FTX’s philanthropic and life science divisions. The company has accused them of diverting funds.
Liquidation of Cryptocurrency Holdings
FTX recently obtained court approval to liquidate, invest, and hedge $3.4 billion worth of cryptocurrency holdings to settle its outstanding debts. It owns significant amounts of Solana (SOL), Bitcoin (BTC), and Ether (ETH).
Hot Take: FTX Fights for Recovery Against Former Employees
FTX’s legal battle against former employees underscores the company’s determination to recover funds in the face of bankruptcy. This lawsuit highlights allegations of fraudulent asset withdrawals and the exploitation of connections within the company. FTX’s ongoing recovery efforts demonstrate its commitment to resolving its substantial debt and holding accountable those involved in financial improprieties.
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