After suing Joseph Bankman and Barbara Fried, the parents of disgraced crypto mogul Sam Bankman-Fried (SBF), FTX has filed a lawsuit against former employees of Salameda, an affiliate firm in Hong Kong, to recoup around $157 million.
The lawsuit, filed last week in the U.S. Bankruptcy Court for the District of Delaware, alleged that Salameda was actually controlled by Bankman-Fried and the defendants – Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong, and the companies 3Twelve Ventures and BDK Consulting – fraudulently withdrew assets from FTX in the days leading to the filing of Chapter 11 bankruptcy in November 2022.
During the preference period or the 90 days before the filing for bankruptcy on Nov. 11, the defendants allegedly received the benefit of withdrawals that account for preferential transfers or skipped a long line of pending requests to withdraw millions in crypto assets from their FTX accounts.
The lawsuit claimed the defendants had accounts on FTX and FTX.US or both prior to the Chapter 11 filing.
“Prior to the filing of the Chapter 11 cases, FTX.com and FTX US operated exchanges offering cryptocurrency trading services. Defendants had accounts on one or both exchanges,” the court filing read.
Moreover, it claimed defendants used their connections to FTX personnel to make sure they would be given priority over other customers. They were able to complete transactions on Nov. 8, 2022, merely hours before FTX paused withdrawals from its platform, the lawsuit said.
The total value of these transfers is estimated at $157.3 million, with $123 million withdrawn on Nov. 7.
The transfers were executed “with the intent to hinder, delay or defraud FTX US’ present or future creditors,” the court filing alleged.
FTX said Michael, Nguyen and Wong were not the only ones who benefited from their connections to the company.
“Defendants Michael Burgess, Nguyen and Wong were not the only ones to benefit from these connections: withdrawals representing substantially the entire balances of the FTX.com accounts registered in the names of defendants Matthew Burgess and Lesley Burgess also were processed successfully, with the final withdrawals completed just hours before the FTX.com exchange halted withdrawals on November 8, 2022,” the filing read.
This is not the first time the FTX bankruptcy estate has attempted to recoup payments from related parties. Last week, FTX sued SBF’s parents in an attempt to “recover millions of dollars in fraudulently transferred and misappropriated funds.”
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