FTX bankruptcy managers accused of spending funds on luxury hotels, travel as creditors file legal action

An FTX creditor Lidia Favario has raised concerns astir the excessive spending by bankruptcy managers handling the defunct exchange’s proceedings, according to a tribunal filing.

In a missive to Judge John Dorsey, Favario described the spending arsenic extravagant and inconsistent with the Department of Justice (DOJ) guidelines connected tenable expenses.

Questionable expenses

Favario cited circumstantial examples of extravagant spending from instrumentality firms similar Sullivan & Cromwell and Alvarez & Marsal (A&M), the fiscal advisory steadfast overseeing the bankruptcy process.

According to her, professionals from these firms often stayed astatine high-end accommodations, including the five-star Hotel Du Pont successful Delaware.

She besides pointed retired a lawsuit wherever an A&M nonrecreational spent $971.74 for a azygous nighttime astatine a luxury edifice successful New York. These individuals besides stayed astatine the Grand Hyatt, a high-end oceanfront edifice successful Nassau.

Transportation costs besides raised eyebrows. Favario revealed that Kumaman Ramanathan, an A&M professional, spent $1,733 connected taxi rides during a azygous week successful November 2022—another nonrecreational billed $151.33 for a five-minute taxi thrust from Hotel Du Pont to a tribunal hearing.

Furthermore, the property reportedly paid $2,683 for 3 taxis to hold for FTX CEO John Ray during his deposition, portion business-class flights for the professionals outgo up to $4,279 per trip.

Favario described these expenses arsenic a blatant disregard for the estate’s funds to compensate creditors. She emphasized that galore creditors, including herself, person suffered terrible fiscal losses owed to FTX’s collapse.

To code these concerns, Favario urged the tribunal to grow the scope of disbursal reviews to guarantee accountability and adherence to DOJ guidelines. She argued that holding professionals to tenable spending standards would beforehand fairness successful the bankruptcy process.

Scam mails

Another creditor, Sunil Kavuri, has raised the alarm implicit a emergence successful scam emails targeting FTX creditors.

These fraudulent messages purpose to exploit confusion astir the repayment timeline. Kavuri warned recipients not to click connected immoderate links and to trust lone connected the authoritative claims portal for updates.

He stated:

“Scam emails are being sent out. Do not click connected links. FTX has not started repayments. Only spell nonstop to the claims portal/official sites.”

This question of scam emails appears linked to misinformation dispersed by circumstantial crypto influencers. Over the past month, respective influencers had wrongly claimed that FTX repayments would statesman successful January 2025.

However, authoritative statements corroborate that payouts are not expected earlier March 2025.

The station FTX bankruptcy managers accused of spending funds connected luxury hotels, question arsenic creditors record ineligible action appeared archetypal connected CryptoSlate.