- Legal action unveils extensive fraud at bankrupt crypto giant FTX Trading.
- Lawsuit exposes alleged cash shortfall and dubious transactions at FTX.
- Accusations of island acquisition and unpaid equity in lawsuit against FTX co-founder.
The latest legal action against Sam Bankman-Fried, co-founder of the now-bankrupt crypto giant FTX Trading Ltd., and his former top execs has shed light on the allegations of extensive fraud within the collapsed crypto empire.
FTX Trading is reportedly attempting to recover millions of dollars in cash and reverse over $1 billion in dubious transactions, according to the lawsuit filed recently.
The lawsuit uncovers that Caroline Ellison, former co-CEO of the associated hedge fund Alameda Research, had projected a cash deficit exceeding $10 billion at FTX.com, approximately eight months prior to the crypto exchange’s downfall.
The legal document also alleges that Bankman-Fried, along with former FTX Chief Technology Officer Gary Wang, withdrew $546 million from Alameda in May 2022 to purchase shares in Robinhood Markets Inc.
The lawsuit includes several other accusations
The lawsuit alleges that a memo exchanged between a foundation officer and Gabriel Bankman-Fried, Sam’s brother, proposed a plan to acquire the small island nation of Nauru and construct a bunker there.
According to the lawsuit, in the event of a global catastrophe leading to the demise of half or more of the world’s population, the island would serve as a refuge for members of the effective altruism movement, a philosophy publicly endorsed by Sam Bankman-Fried. The memo also suggested that owning a sovereign nation could have other potential benefits.
The lawsuit alleges that around March 2022, when Ellison projected a cash shortfall exceeding $10 billion at FTX.com, she awarded herself a $22.5 million bonus. Through a complex series of transfers, Ellison is alleged to have moved the money from Alameda into her FTX account, with $10 million eventually landing in her personal bank account.
Nishad Singh, FTX’s former director of engineering, is alleged to have received a fraudulent transfer of approximately $477 million in FTX common shares without providing anything in return.As per the lawsuit, Sam Bankman-Fried is alleged to have granted himself rights to over $6 million in equity without any payment in February 2020.
The lawsuit is one of the latest one’s against FTX and SBF, which was one of the biggest collapses in the cryptocurrency realm.
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