Bankrupt cryptocurrency exchange FTX has filed a lawsuit against former employees of its Hong Kong affiliate, Salameda, seeking to recover approximately $157.3 million. The lawsuit alleges that the Hong Kong entity, which was under the control of FTX’s former CEO, Sam Bankman-Fried, engaged in fraudulent activities, FTX’s court filings on September 21 revealed.
The court filing names Michael Burgess, Matthew Burgess, their mother Lesley Burgess, Kevin Nguyen, Darren Wong, and two companies associated with them. These entities are said to have held accounts registered at both FTX.com and FTX US, from which they fraudulently withdrew assets in the period leading up to FTX’s bankruptcy filing on November 11, 2022, media reports said.
During the 90 days before the bankruptcy filing, referred to as the Preference Period, the defendants allegedly received preferential transfers that are considered recoverable under the Bankruptcy Code. The filing suggests that the defendants rushed to withdraw assets and used their connections with FTX personnel to ensure they received preferential treatment over other customers.
As of January, FTX had reportedly recovered over $5 billion in different assets, while in June, the bankruptcy team indicated that the company owed its customers a substantial $8.7 billion.
Additionally, the filing highlights evidence from messages on the communication platform Slack, suggesting that Matthew Burgess enlisted the help of other FTX employees to manipulate certain pending withdrawal requests from one of Michael Burgess’ FTX US exchange accounts, misrepresenting the account as his own.