FTX Sues Former Employees of Hong Kong Affiliate, Seeks $157 Million

Bankrupt crypto speech FTX has sued erstwhile employees of Salameda, a Hong Kong-incorporated entity affiliated with FTX that it says was controlled by the firm's ex-CEO, Sam Bankman-Fried, to retrieve astir $157.3 million, according to a tribunal filing precocious Thursday.

The filing alleges Michael Burgess, Matthew Burgess, their parent Lesley Burgess, Kevin Nguyen, Darren Wong and 2 companies owned oregon controlled respective firms that had accounts registered astatine FTX.com and FTX US, and fraudulently withdrew assets successful the days starring up to FTX's bankruptcy.

During the 90 days earlier the Nov. 11, 2022 bankruptcy filing, known arsenic the Preference Period, the defendants received the payment of withdrawals that represent preferential transfers and "are avoidable nether the Bankruptcy Code," the filing said. The defendants raced to retreat assets and exploited their connections to FTX unit to guarantee they would beryllium prioritized implicit different customers, according to the filing.

The filing further alleges, citing messages connected communications exertion Slack, that Matthew Burgess enlisted different FTX employees to “push out” definite pending withdrawal requests from 1 of Michael Burgess' FTX US speech accounts portion misrepresenting the relationship arsenic his own.

The transfers were completed conscionable hours earlier FTX halted withdrawals connected Nov. 8, 2022. More than $123 cardinal of the full $157.3 cardinal (based connected Aug. 31, 2023, pricing) were withdrawn connected oregon aft Nov. 7.

The transfers were made "with the intent to hinder, hold oregon defraud FTX US’s contiguous oregon aboriginal creditors," the filing said.

Bankman-Fried is presently successful jailhouse preparing for his trial, scheduled to commencement connected Oct. 3. On Thursday, an appeals tribunal rejected his effort to get retired of jailhouse earlier the commencement of the proceedings.