Bankrupt FTX Exchange Files Lawsuit to Recover $157.3 Million; Ex-CEO Awaits Trial in Jail
Summary:
The bankrupt cryptocurrency exchange FTX is seeking to recover $157.3 million through a lawsuit filed against former employees affiliated with the Hong Kong-based company, Salamde. Allegedly, the funds were fraudulently withdrawn prior to FTX's bankruptcy declaration. The accused, including Michael Burgess, Matthew Burgess and others, allegedly coerced FTX staff to expedite specific withdrawal requests. Meanwhile, former FTX CEO, Sam Bankman-Fried, is awaiting trial in prison, with his plea for early release denied.
On September 21, the insolvent crypto trading platform FTX initiated a lawsuit against its former staff who worked at the Hong Kong-based enterprise Salamde, which is linked to the FTX group, as per the legal documents. The documents elaborate that FTX is attempting to recoup $157.3 million it alleges was unlawfully taken out just before the exchange declared bankruptcy.
The lawsuit implicates Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong, and two other firms alleged to have control of businesses with accounts registered on FTX.com and FTX US, and managed to pull out funds in the "preference period" just before the official declaration of bankruptcy. The legal document states: “Each transfer to Defendant Michael Burgess was conducted with the aim to obstruct, defer, or swindle FTX US's existing or prospective creditors."
The document continues, highlighting that these transactions were fulfilled mere hours before FTX suspended all non-fiat user transactions on November 8, 2022. The lawsuit accuses Mathew Burgess of coercing FTX employees to expedite certain pending withdrawal requests "from one of Michael Burgess's FTX US exchange accounts, while dishonestly presenting the account as his own." This information is supported by messages found on the Slack app. Related: Binance and CEO Changpeng Zhao request court to abandon SEC suit
This news arrives as ex-FTX CEO Sam Bankman-Fried (SBF) waits in prison for the opening of his two-part trial scheduled for October 3, 2023. The subsequent trail is planned for March 2024. On September 21, judges dismissed a plea by SBF for an early release from prison, arguing that being incarcerated impedes his ability to properly prepare for his trial, infringing on his First Amendment Rights pursuant to the US constitution. Nevertheless, Judge Lewis Kaplan on the same day approved a motion put forward by the Department of Justice (DOJ) prohibiting testimony from SBF's key witnesses. Magazine: Tips from Bitcoin veterans and industry experts on securing your cryptocurrency in an unpredictable market.
Published At
9/22/2023 9:42:50 AM
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