The founder and leadership of FTX, the cryptocurrency trading platform that scammed clients out of billions, are facing a new lawsuit. The administrators who took over the reins after the scandal was uncovered claim the founder and his team for 1,000 million dollars that they appropriated before the bankruptcy last November.
They claim that the defendants continually embezzled funds to finance luxury apartments, payments to politicians, speculative investments and other projects, such as the purchase of an island as a refuge, while committing "one of the largest financial frauds in history." The events occurred between February 2020 and November 2022. They include distributing bonuses without control, free FTX shares, diversion of funds for investments, and transfer of funds to family members.
The CEO of Alameda, investment arm of FTX, and former partner of Bankman-Fried, Caroline Ellison, estimated a hole of 10,000 million dollars eight months before the fall of the platform. She also said that they owed 8,000 million in cash to clients "who could not return" just three months after the fall. That did not stop her from granting herself a bonus of 22.5 million, transferred from Alameda and used to invest in an artificial intelligence company. It was not the only time that she received a bonus. "They are not justifiable given their widespread wrongdoing," the lawsuit states.
When FTX went bankrupt, it was revealed that client funds ended up in Alamada to finance private investments by the founder and managers. The lawsuit states that Bankman-Fried and the former technology manager, Gary Wang, withdrew 546 million from Alameda in May 2022 to buy shares of Robinhood, an investment platform for individuals.
On another occasion, Nishad Singh, a director of engineering, fraudulently received $477 million worth of FTX shares without having to give anything in return. Bankman-Fried himself was awarded rights for another 6 million without paying for it. Ellison also received 2.75 million free options.
New plans managed by Bankman-Fried and its managers have also been uncovered. One of them was to buy the island of Nauru, in Micronesia, through the non-profit foundation of the company to turn it into a bunker to protect themselves from a cataclysm. In the event that half or more of the world's population perished, the island would be used to ensure the survival of members of an altruistic movement that Bankman-Fried followed.
The boss will face justice in October accused of fraud and various other charges. He is currently out on $250 million bail and lives at his parents' house. The Prosecutor's Office has just accused him of witness tampering after leaking documents to the press with which he tries to put Ellison in a bad light and suggest that he perpetrated the fraud on his behalf.
Bankman-Fried, whom the prosecution sees as the mastermind behind the fraud, has pleaded not guilty to the criminal charges he faces. Ellison, Wang and Singh pleaded guilty and agreed to cooperate with prosecutors. The lawsuit filed now claims that he transferred $10 million to his father when the company was already insolvent. A "gift" that he is serving to pay for his defense expenses.
