FTX recently sued former CEO Sam Bankman-Fried and other former executives to recoup more than $1 billion they allegedly misappropriated before FTX went bankrupt.
A lawsuit filed with Federal Bank of America on July 20 named former CEO of Alameda Research, Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, former FTX engineering director Nishad Singh and Bankman-Fried as defendants. In the lawsuit, FTX said that the defendants violated its loyalty obligations and continually misappropriated funds to finance luxury contributions, speculative investments and other personal projects.
The lawsuit alleged that Bankman-Fried and Wang took $546 million from Alameda in May 2022 to buy shares in Robinhood Markets Inc. Bankman-Fried and Wang offered Alameda with low-interest loans that did not require any collateral. 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.
This is the latest lawsuit filed by FTX to recoup funds that the company claims was misappropriated by former executives. All of these lawsuits are part of a broader effort by the company’s new CEO, John Ray, and his advisers to recover funds to repay creditors, including customers whose crypto was held on the exchange before the exchange’s collapse in November. Bankruptcy law allows FTX to recover payments made before the company filed Chapter 11.
FTX recently launched a claims portal for customers who suffered damage from the exchange’s bankruptcy last year. A representative for Bankman-Fried declined to comment. Lawyers for Wang, Singh and Ellison also did not respond to this news.