Bankrupt FTX Trading Ltd. will try to claw back millions of dollars in cash and unwind more than $1 billion in questionable transactions as part of a new lawsuit filed against company founder and alleged fraudster Sam Bankman-Fried and his top lieutenants.
The suit targets Bankman-Fried, FTX co-founder Gary Wang, who was also the chief technology officer; Nishad Singh, the former director of engineering; and Caroline Ellison, who was the co-chief executive of Alameda Research LLC, a key FTX unit. They are accused of various fraudulent transfers that benefited them personally, but did nothing for FTX.
For example, the complaint alleges that Bankman-Fried and Wang of took $546 million from Alameda in May 2022 to acquire shares in Robinhood Markets Inc. Bankman-Fried and Wang provided Alameda with allegedly sham loans that didn’t require the executives post any collateral and offered interest rates below commercial market rates. The only authorization for Alameda to extend the loans came from Ellison, the according to the suit.
Bankman-Fried, Wang and Singh also are accused of using fake loans to acquire stock from FTX that was worth $250 million at the time.
The complaint is the latest filed by FTX to recover money the company says was wrongly transferred off the platform by Bankman-Fried and his closest allies at FTX.
Read More: FTX Seeks $700 Million From Bankman-Fried’s Celebrity Connector
All of the lawsuits are part of a broad effort by the company’s new chief executive officer, John Ray, and his advisers to recover funds that can repay creditors, including customers whose cryptocurrency was held on the exchange before it collapsed in November. Bankruptcy rules allow FTX to recover payments made before the firm filed Chapter 11.
A representative for Bankman-Fried declined to comment. Lawyers for Wang, Singh and Ellison didn’t immediately respond to messages sent after normal business hours seeking comment on the complaint.
The case is FTX Trading Ltd., 22-11068, US Bankruptcy Court, District of Delaware.
Author: Steven Church, Jonathan Randles and Jeremy Hill
