FTX Kingpin Sam Bankman-Fried & 3 Associates Slapped With $1B Lawsuit

FTX has filed suit against former CEO Sam Bankman-Fried, co-founder Gary Wang, former director of engineering Nishad Singh, and former Alameda Research CEO Caroline Ellison to recover damages from their alleged fund embezzlement.

“They commingled and misused corporate and customer funds, lied to third parties about the business of the FTX Group, joked internally about their tendency to lose track of millions of dollars in assets, and impulsively bought companies with misappropriated funds without conducting any due diligence,” stated the FTX lawyers in the July 20 complaint filed in a U.S. Bankruptcy Court.

Bankman-Fried was hailed as the rising star of the Web 3 world. His exchange, which had once been valued at $32 billion, collapsed overnight as a result of a lack of liquidity and customer withdrawal demands that the business was unable to fulfill.

SBF has been charged with borrowing $170 million from Alameda and moving $10 million in diverted customer cash to his father’s private account, which he reportedly used to pay for his own legal defense. The list of purportedly fraudulent transfers also involved his other partners, Wang and Singh, who each illegally borrowed $54 million and $25 million, respectively.

Another important player in Bankman-Fried’s business empire, Caroline Ellison, the former CEO of Alameda Research, was also accused of misappropriating funds to pay herself a $22.5 million bonus, of which she used $10 million to acquire a stake in the artificial intelligence firm AI Company in 2022, according to the plaintiff’s petition.

FTX: SBF’s Star Witness Revealed

So far, Bankman-Fried’s representatives have chosen not to respond. The former CEO entered a not-guilty plea and his trial is expected to commence later this year. In an effort to retrieve as much money for creditors as possible, FTX’s attorneys under its new CEO have been looking for the firm’s remaining assets.

According to recent reports from The New York Times, prior to the demise of Sam Bankman-Fried’s crypto empires, Alameda Research, and FTX, Ellison is said to have kept secret journals. This information was revealed before Bankman-Fried’s trial, in which she is expected to be a key witness.

Given that Ellison was a key participant in SBF’s operations and a close associate, the discovery of these private records is noteworthy for SBF’s upcoming trial in October.