The bankrupt cryptocurrency exchange FTX has taken legal action against former employees of its Hong Kong affiliate company, Salameda, in an attempt to recover $157.3 million.
FTX, which is no longer operational, filed a lawsuit on September 21 against individuals who used to work for Salameda, a company associated with the FTX group, as stated in court documents.
In the lawsuit, FTX claims that $157.3 million was fraudulently withdrawn just before the exchange filed for bankruptcy. The individuals named in the lawsuit include Michael Burgess, Matthew Burgess, their mother Lesley Burgess, as well as Kevin Nguyen and Darren Wong. Additionally, two other companies are alleged to have had ownership of accounts on FTX.com and FTX US, from which they withdrew funds during the “preference period” prior to FTX’s bankruptcy filing.
The court documents assert that these transfers to defendant Michael Burgess were made with the intention to hinder, delay, or defraud FTX US’s current or future creditors. Notably, these transfers occurred shortly before FTX suspended all non-fiat user withdrawals on November 8, 2022.
The lawsuit also alleges that Matthew Burgess pressured FTX employees to prioritize pending withdrawal requests from one of Michael Burgess’s FTX US exchange accounts while misrepresenting the account as his own. This claim is supported by messages exchanged on the Slack platform.
This legal action unfolds amidst the incarceration of former FTX CEO Sam Bankman-Fried (SBF), who is awaiting a two-part trial. The first trial is scheduled to commence on October 3, 2023, with the second set for March 2024. On September 21, a judge ruled against granting SBF early release from jail, as he argued that it hindered his trial preparation and violated his First Amendment rights under the United States Constitution. On the same day, Judge Lewis Kaplan approved a motion from the Department of Justice to disallow the testimony of SBF’s key witnesses.