Cryptocurrency exchange FTX has initiated a lawsuit against former employees of its Hong Kong affiliate, Salameda. The exchange is determined to recover $157.3 million, which it alleges was fraudulently withdrawn shortly before FTX declared bankruptcy.
Background and Allegations
The lawsuit, filed on September 21, reveals a complex web of financial transactions and alleged misdeeds. It sheds light on the involvement of a couple of individuals. They are Michael Burgess, Matthew Burgess, Lesley Burgess, Kevin Nguyen, and Darren Wong, along with two other companies.
They are accused of holding ownership of accounts on FTX.com and FTX US. Furthermore, for orchestrating fund withdrawals during the “preference period” leading up to FTX’s bankruptcy filing.
The court filing explicitly states that these transfers to Defendant Michael Burgess were carried out with a certain intent. This is to hinder, delay, or defraud FTX US’s current or future creditors. It is worth noting that these transactions occurred mere hours before FTX suspended all non-fiat user withdrawals on November 8, 2022.
Matthew Burgess’s Involvement
The lawsuit also points a finger at Matthew Burgess, alleging that he pressured FTX employees to prioritize certain pending withdrawal requests from one of Michael Burgess’s FTX US exchange accounts. To support this claim, the filing cites messages exchanged on Slack as evidence.
These legal proceedings come at a time when former FTX CEO Sam Bankman-Fried (SBF) finds himself behind bars, awaiting the commencement of his two-part trial. The first part is set to begin on October 3, 2023, while the second trial is scheduled for March 2024.
SBF’s Legal Challenges
It is noteworthy that SBF’s request for early release from jail was denied by judges on September 21. SBF argued that he couldn’t adequately prepare for his trial while incarcerated. He further cited concerns about the violation of his First Amendment rights under the United States Constitution.
Key Witnesses Barred
On the same day, Judge Lewis Kaplan made a pivotal decision by granting a motion put forward by the Department of Justice. This motion effectively bars the testimony of SBF’s key witnesses, adding further complexity to the unfolding legal drama.
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