The defendants allegedly used their connections on the inside to ensure that their withdrawals were prioritized over those of other customers.
Bankrupt crypto exchange FTX has sued former employees of its Hong Kong-based affiliate Salameda in hopes of recovering $157.3 million. According to a Thursday filing, Salameda was being controlled by the firm’s ex-CEO, Sam Bankman-Fried.
New Filing against Ex-Employees of Salameda Reveals ‘Shady’ FTX Withdrawals
The filing claims that 5 individuals and two companies are behind several withdrawals that took place in the days leading up to FTX’s bankruptcy. As alleged in the filing, Matthew Burgess, Michael Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong, and two other business entities owned or controlled various accounts that are spread across FTX.com and FTX US. It was these accounts that the alleged bad actors used to fraudulently withdraw their assets only a few days before FTX eventually folded on November 11, 2022, claims the filing.
The defendants allegedly used their connections on the inside to ensure that their withdrawals were prioritized over those of other customers. That is not to mention a particular case where Matthew Burgess allegedly persuaded some FTX employees to help “push out” certain pending withdrawal requests from one of his FTX US exchange accounts.
Of the total $157.3 million, the defendants withdrew about $123 million on or after November 7. This means that the transfers effectively ended so that FTX could halt withdrawals on November 8.
The filing then concluded that the defendants premeditated their actions and had carried them out “with the intent to hinder, delay or defraud FTX US’s present or future creditors”.
As of publication, Sam Bankman-Fried (SBF) is currently being held in jail. However, his criminal trial will commence on October 3. But even as he awaits the trial, SBF’s legal team has been attempting to get him released from jail, at least before the day.
Meanwhile, prosecutors have also warned against releasing him as that might pose risks, such as witness intimidation, to the case.
To this end, an appeals court has, on Thursday, rejected the motion to have the disgraced ex-CEO released from jail before the trial.