FTX sues Bankman-Fried for US$1bn

FTX is suing former CEO and founder Sam Bankman-Fried for US$1bn, along with three former executives at the firm. 

The legal action is being led by John Ray III, the current CEO and an attorney specialising in the recovery of funds from failed corporations. 

The action is aimed at recovering assets lost by FTX’s creditors and investors at the time of the collapse. The defendants are accused of misappropriating the US$1bn before the firm filed for Chapter 11 bankruptcy. 

The three other defendants named in court documents are Caroline Ellison, who led Bankman-Fried’s Alameda Research hedge fund; former FTX technology chief Zixiao (Gary) Wang; and former FTX engineering director Nishad Singh.

FTX claims the defendants continually misappropriated funds in order to pay for their expensive lifestyles including luxury condominiums, payments to political parties, speculative investments and other “pet projects.”

The alleged fraudulent transfers occurred between February 2020 and November 2022 when FTX filed for Chapter 11 protection, and can be undone under the US bankruptcy code or Delaware law (where the case has been filed), according to Reuters

Bankman-Fried, Ellison, Wang and Singh also face several criminal charges in relation to the collapse of FTX and could be sentenced to jail time. Ellison, Wang and Singh are understood to have pleaded guilty and are cooperating with authorities. Bankman-Fried denies the charges.