FTX Trading has recently filed a lawsuit against its former CEO, Sam Bankman-Fried (SBF), and several members of his inner circle. The company is seeking to recover over $1 billion that was allegedly misappropriated by the defendants before the company’s downfall.
According to the lawsuit, SBF and Wang are accused of using $546 million of client funds to purchase shares in Robinhood, while Ellison is said to have awarded herself a $29 million bonus.
FTX New Management Remains Firm in Their Stance
These actions have led to accusations from regulators and defrauded investors that the former management team of the crypto exchange orchestrated a massive crypto scam, resulting in billions of dollars in losses. FTX Trading has agreed with these allegations, stating that it was one of the largest financial frauds in history.
Sam Bankman-Fried, the disgraced founder of FTX, is facing mounting legal troubles as new accusations emerge from the team now behind FTX Trading. A recent complaint filed in Delaware bankruptcy court, as reported by The Economic Times, alleges that Bankman-Fried swindled over $1 billion in customer funds between February 2020 and November 2022, when the exchange filed for bankruptcy protection.
The complaint also names Caroline Ellison, former leader of Alameda Research, Zixiao “Gary” Wang, former FTX technology executive, and Nishad Singh, former engineering director, as co-conspirators in the alleged fraud.
According to the complaint, Bankman-Fried and his associates used the misappropriated funds to finance political campaigns, purchase luxury apartments, engage in speculative investments, and fund other personal projects.
FTX Trading claims that the fraudulent transfers included over $725 million in equity awarded by the once-leading crypto platform and West Realm Shires without receiving any value in exchange.
The complaint further alleges that Bankman-Fried and Wang used $546 million to purchase shares in Robinhood, while Ellison awarded herself nearly $29 million in bonuses.
John J. Ray III, the current CEO, and Chief Restructuring Officer of FTX, has been vocal in his criticism of the exchange’s former management team. The company had been commingling customer deposits since its inception in 2019, while former employees misled banking institutions by representing Alameda Research as a trading firm for transactions.