FTX alleges illicit withdrawals made by former associates of Salameda, under the control of ex-CEO Sam Bankman-Fried.
FTX alleges illicit withdrawals made by former associates of Salameda, under the control of ex-CEO Sam Bankman-Fried.
Bankrupt crypto exchange FTX (CRYPTO: FTT) has initiated legal action against former associates of Salameda, a Hong Kong-based entity reportedly under the direct control of the crypto exchange’s former CEO Sam Bankman-Fried.
The lawsuit alleges that these associates illicitly withdrew approximately $157.3 million.
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The court documents cite Michael Burgess, Matthew Burgess, Lesley Burgess, Kevin Nguyen, Darren Wong, and two companies they managed for operating multiple accounts on FTX.com and FTX US.
It is alleged that these individuals and entities siphoned off assets in the days preceding FTX’s declaration of bankruptcy.
“Within the 90 days leading up to the bankruptcy announcement on Nov. 11, 2022, these defendants benefited from withdrawals which are deemed “preferential transfers” and “are avoidable under the Bankruptcy Code,” said the document.
They allegedly used their ties with FTX staff to ensure their withdrawals were given precedence over other clients.
Furthermore, the court document cites Slack messages, suggesting that Matthew Burgess solicited help from other FTX staff to expedite certain withdrawal requests from an FTX US account belonging to Michael Burgess, while falsely presenting the account as his own.
These transactions were finalized mere hours before FTX suspended all withdrawals on Nov. 8, 2022.
Of the total $157.3 million that was withdrawn, over $123 million was extracted on or after Nov. 7.
“These transactions were executed “with the intent to hinder, delay or defraud FTX US’s present or future creditors,” said the court document.
Meanwhile, Bankman-Fried is currently incarcerated, awaiting his trial set to commence on Oct. 3.
In a recent development, an appellate court dismissed his plea to be released from custody prior to the trial’s onset.
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