Former workers of Salameda, a company incorporated in Hong Kong and connected to the bankrupt cryptocurrency exchange FTX, have been sued by FTX. The business asserts that Sam Bankman-Fried, the former CEO of FTX, was in charge of Salameda. The lawsuit’s main objective is to get back about $157.3 million from the alleged wrongdoing.
The lawsuit names Kevin Nguyen, Darren Wong, Lesley Burgess, Michael Burgess, Matthew Burgess, and two companies, alleging that they were in charge of a number of businesses that had accounts with FTX.com and FTX US. It claims that prior to FTX declaring bankruptcy, they improperly withdrew assets.
The defendants apparently benefited from withdrawals that were classified as preferred transfers within the 90 days prior to the bankruptcy filing on November 11, 2022, known as the “Preference Period,” which are considered avoidable under the Bankruptcy Code. They allegedly hurried to withdraw money and took advantage of their relationships with FTX employees to get ahead of other clients.
Additionally, it is claimed in the petition that Matthew Burgess misrepresented himself as the account’s owner and used the communication tool Slack to persuade other FTX staff members to accelerate some outstanding withdrawal requests from one of Michael Burgess’ accounts on the FTX US exchange.
The defendants finished these transfers just hours before FTX on November 8, 2022, stopped allowing withdrawals. Over $123 million of the $157.3 million total claimed (calculated using pricing as of August 31, 2023) was purportedly withdrawn on or after November 7 with the goal to impede, delay, or deceive current or potential creditors of FTX US.
Bankman-Fried is now incarcerated and getting ready for his trial, which will begin on October 3. The appeals court recently denied his request for an early release prior to the trial processes.