According to CoinDesk: Bankrupt cryptocurrency exchange FTX has initiated legal action against former employees of Salameda, a firm incorporated in Hong Kong and associated with FTX. The company claims that the ex-CEO of FTX, Sam Bankman-Fried, controlled Salameda. The aim of the lawsuit is to recover approximately $157.3 million from the alleged wrongdoing.
The lawsuit names Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong and two companies, asserting they controlled several firms that had accounts with FTX.com and FTX US. It alleges that they fraudulently withdrew assets leading up to FTX's bankruptcy declaration.
During the 90 days preceding the bankruptcy filing on Nov. 11, 2022, termed the "Preference Period," the defendants reportedly benefited from withdrawals characterized as preferential transfers, which are deemed avoidable under the Bankruptcy Code. They purportedly rushed to withdraw assets and misused their connections with FTX staff to ensure priority over other customers.
The filing also alleges that Matthew Burgess manipulated Slack, a communication application, to encourage other FTX employees to expedite certain pending withdrawal requests from one of Michael Burgess' accounts on the FTX US exchange, while falsely representing the account as his own.
The defendants completed these transfers mere hours before FTX stopped withdrawals on Nov. 8, 2022. Of the total $157.3 million claimed (calculated according to Aug. 31, 2023, pricing), over $123 million were withdrawn on or after Nov. 7, allegedly with the intention to obstruct, delay or defraud present or future creditors of FTX US.
Bankman-Fried, who is currently in jail, is preparing for his trial starting Oct. 3. His recent attempt for an early release before the trial proceedings was rejected by the appeals court.
