Bankrupt crypto exchange FTX has filed a new lawsuit against former CEO Sam Bankman-Fried (SBF) and three other ex-senior executives to recover more than $1B of funds in doubtful transactions. The former executives were alleged of conducting various fraudulent transfers benefiting them personally but doing nothing for FTX. Other defendants in the lawsuit include the former chief technology officer (CTO) Gary Wang, the former director of engineering Nishad Singh, and the former co-CEO of the sister company Alameda Research, Caroline Ellison. - In one incident, SBF and Wang offered Alameda fake loans that did not require the executives to show any collateral and provided interest rates under commercial market rates.
- Only Ellison was authorized to extend the loans in Alameda.
- The lawsuit also claimed that SBF, Wang, and Singh took out fake loans to acquire $250M of stock from FTX.
- The case, along with several other lawsuits, is part of the new FTX management's wider efforts to recover funds, repay creditors, and ultimately relaunch the exchange.
- The new management recently began talks with investors about a potential restart, and a U.S. bankruptcy court set Sept. 29 as the deadline for former customers to submit their claims against FTX and its affiliated companies.
FTX, previously the third-largest crypto exchange, filed for Chapter 11 bankruptcy in November 2022, with all the 130 entities under the roof of FTX Group. - The downfall followed the claims that SBF used customer funds in FTX to compensate for losses at Alameda Research.
- The bankruptcy rules allow FTX to recover payments made before the firm filed for bankruptcy.
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