© Reuters
Investing.com – In a recent development, FTX Trading Ltd filed a lawsuit against its founder, Sam Bankman-Fried, and several former executives. The cryptocurrency exchange alleges that they embezzled over $1 billion before the company became insolvent.
The lawsuit was filed in Delaware bankruptcy court and also involves Caroline Ellison, who was the head of Bankman-Fried’s Alameda Research hedge fund. Other defendants include Zixiao “Gary” Wang, who served as chief technology officer at FTX, as well as Nishad Singh, a former director of engineering.
According to FTX’s allegations, these defendants used company funds for extravagant personal expenses, including luxury apartments and political donations. In addition, they are accused of making risky investments and financing other projects that were unrelated to the company’s activities. This misuse is considered one of the biggest financial scams in history.
These alleged illegal transfers took place between February 2020 and November 2022, which coincides with the date FTX filed for Chapter 11 protection. Under U.S. bankruptcy law or Delaware law, such transactions can be reversed.
A Bankman-Fried representative declined to comment on the case, while attorneys representing the other accused parties remained unreachable.
US prosecutors allege Bankman-Fried orchestrated a fraud that led to the downfall of FTX and resulted in the misuse of billions of dollars in client funds. However, he pleads innocent to all charges against him. On the contrary, Ellison, Wang and Singh admitted guilt and pledged to cooperate with investigators.