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The estate representing the bankrupt crypto exchange FTX is seeking to reclaim more than $1 billion in cash and shares from founder Sam Bankman-Fried and other executives. These assets are alleged to have been fraudulently transferred to their personal ownership.
In a recent lawsuit filed on Thursday, it is claimed that the defendants exploited their significant influence over the FTX Group's operations and infrastructure to orchestrate a substantial fraud spanning from February 2020 to November 2022. This alleged fraudulent scheme involved recklessly spending FTX's assets on opulent residences, political and so-called "charitable" donations, as well as diverse investments.
In the filing, it was reported that FTX had granted over $725 million in equity to several individuals, including Bankman-Fried, the former CTO and Co-Founder Gary Wang, Director of Engineering Nishad Singh, and former CEO of Alameda Research, Caroline Ellison. Out of this total amount, approximately $447.8 million was supposedly allocated to Singh. The lawsuit documents the manner in which this sum was recorded as a loan involving Singh, FTX's trading arm Alameda, and the exchange itself.
“In reality, no one paid for the shares, and no one intended to do so,” the lawsuit reads.
The lawsuit further claims that FTX had transferred $4.86 million to the organization for the purpose of acquiring real estate. Additionally, Allen "Joe" Bankman, who is the father of Bankman-Fried, reportedly received $10 million from Alameda to cover legal expenses.
Moreover, it is alleged that Gabriel Bankman-Fried, who is Sam's brother, had intentions to acquire the entire nation of Nauru, a small island located northeast of Australia, utilizing funds from the FTX Foundation. Additionally, an astonishing sum of over $100 million, sourced from a blend of FTX customer funds, was purportedly channeled into political donations for both parties and political action committees.
Caroline Ellison, who is under a plea agreement with the U.S. Attorney's Office of the Southern District of New York, stands accused of granting herself a staggering $22.5 million bonus during the peak of FTX's crisis last November.
In a recent development, the U.S. Department of Justice sought to restrain Bankman-Fried from making extrajudicial statements concerning the case due to his unauthorized disclosure of Ellison's confidential diary to the New York Times.
