News - FTX sues management team around SBF

By Ted Maas

FTX sues management team around SBF

The insolvent crypto exchange FTX is in the midst of a restructuring. The new management has now set its sights on Sam Bankman Fried himself and his management team.

FTX founder Sam Bankman-Fried has seen better days. The 31-year-old has been under house arrest since the collapse of his crypto-exchange, banned from playing Leauge of Legends and now a prison sentence of more than 100 years is also hanging over his head. Those who thought that the long fall of the former poster boy of the crypto industry had thus reached a low point are wrong. Because now "SBF" is being sued by his own corporate empire.

As shown in a court document from claims FTX, FTX.US and Alameda Research total $250 million. The lawsuit is not only against Sam Bankman-Fried, but also against his old comrades-in-arms Gary Wang, Caroline Ellision and Nishad Singh. At the center is the acquisition of the crypto platform "Embed," which FTX.US handled for US$220 million shortly before the bankruptcy. With this, SBF's empire wanted to enter the traditional equity sector.

Financing with customers' money

The old management is accused of artificially inflating the company's valuation to close the deal as quickly as possible. There was "virtually no due diligence" in the process, the lawyers write. Embed founder and CEO Michael Gill received an additional $157 million as "bonus for a quick acting".

The whole thing was not funded by FTX.US, as publicly communicated, but by Alameda Research, SBF's trading house. The company obtained the money for the deal from client deposits, the indictment continues.

All executives so far have confessed to embezzling money from customers. All except Sam Bankman-Fried. In total, there are currently 12 charges against SBF. The 31-year-old has pleaded guilty to all charges. The trial against him is ongoing.

Will FTX reopen?

Meanwhile, his old concern continues to restructure. The new CEO, John J. Ray III, continues to seize assets from the corporate network. Among other things, he is reclaiming donations to political organizations and NGOs. By doing so, he wants to compensate customers. But a reopening of FTX is still not out of the question. In mid-April, lawyers for the crypto exchange filed a corresponding request with the court.

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