Bankrupt cryptocurrency exchange FTX has sued former employees of an affiliate in Hong Kong for allegedly preferentially or fraudulently transferring assets, in an attempt to recover assets worth about $157.3 million, a court filing showed.
FTX said in a Thursday filing that Michael Burgess, Kevin Nguyen, Darren Wong and Matthew Burgess — former employees at Salameda, a Hong Kong-based FTX affiliate controlled by Sam Bankman-Fried — along with Lesley Burgess and two other FTX-related firms had preferentially or fraudulently withdrew assets from FTX prior to the bankruptcy proceedings.
The filing added that during the 90-day period before FTX filed for Chapter 11 bankruptcy protection in November, the defendants “collectively received the benefit of withdrawals from their FTX.com and FTX US accounts of the digital assets and fiat currency.”
“Based on pricing as of August 31, 2023, those assets are collectively valued at approximately $157.3 million,” the filing said.
FTX continued that the vast majority of these assets — more than $123 million based on August 31, 2023 pricing — were withdrawn on or after November 7, including over $73 million allegedly fraudulently transferred to Michael Burgess.
“As part of this scheme, Defendant Matthew Burgess, a then-current FTX Group employee, enlisted other FTX Group employees to ‘push out’ certain pending withdrawal requests from one of Michael Burgess’s FTX US exchange accounts, while misrepresenting the account to be his own,” the filing alleged.
Lesley Burgess, Michael Burgess' and Matthew Burgess’ mother, also benefited from the connections and successfully withdrew assets “just hours before the FTX.com exchange halted withdrawals on November 8, 2022,” the filing said.
More complaints to recover funds
FTX also sued the parents of FTX founder Sam Bankman-Fried — Joseph Bankman and Barbara Fried — on Monday, aiming to recover millions of dollars in “fraudulently transferred and misappropriated funds.”
The Monday court filing showed that Bankman and Fried, both Stanford Law School professors, allegedly “exploited their access and influence” within FTX to enrich themselves by millions of dollars.
“From November 2021 to May 2022, Bankman led the charge in directing FTX Group donations of more than $5.5 million to his employer, Stanford University,” a Monday court filing said.
Stanford University said this week that it plans to return the “gifts” worth millions of dollars it received from FTX, according to a Bloomberg report.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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