Investing.com - In a recent development, FTX Trading Ltd has initiated legal action against its founder, Sam Bankman-Fried, and several ex-executives. The cryptocurrency exchange alleges that it misused over $1 billion before the firm went insolvent.
The lawsuit was filed in Delaware's bankruptcy court and also implicates Caroline Ellison who was at the helm of Bankman-Fried's Alameda Research hedge fund. Other defendants include Zixiao "Gary" Wang, who held the position of technology chief at FTX; along with Nishad Singh, former engineering director.
According to FTX's claims, these defendants used company funds for extravagant personal expenses including luxury condos and political donations. Additionally, they are accused of making risky investments and funding other ventures not related to business operations. This misuse is referred to as one of history’s most significant financial scams.
These purported unlawful transfers took place from February 2020 up until November 2022 which coincides with when FTX sought Chapter 11 protection. Under U.S. bankruptcy law or Delaware legislation, such transactions can be reversed.
A representative for Bankman-Fried refused to offer any comments on this matter while attorneys representing other accused parties remained unreachable for remarks.
American prosecutors have alleged that Bankman-Fried orchestrated a fraud leading to the downfall of FTX which involved billions in customer funds being misused. However, he pleads innocent against all charges leveled at him. On the contrary, Ellison along with Wang and Singh have accepted their guilt pledging cooperation with investigators.