Bankrupt crypto firm FTX charged its founder, Sam Bankman Fried (SBF), and his close circle for allegedly laundering $1 billion in fraudulent transactions that did not benefit the company. The latest lawsuit seeks to recuperate the funds from SBF, Chief Technology Officer Gary Wong, former Director of Engineering Nishad Singh, and the co-executive of Alameda Research LLC, Caroline Ellison, Bloomberg reported.
Since taking over as the head of the restructuring team after FTX filed for bankruptcy, John Ray has continued to point out a series of misappropriations by SBF and his right-hand crew. The $1 billion charge is one of the numerous allegations that Ray has brought forward in what he once stated was a “complete failure of corporate controls.”
Mixing Work and Pleasure
Ray has alleged several times that SBF and his associates have commingled work and personal interests. The disgraced FTX founder and his entourage allegedly funded several campaigns in Washington and acquired luxurious houses in the Bahamas, all with customer funds.
According to the lawsuit, Ellison allegedly paid herself a bonus of $22.5 million, which she transferred to her private account and used to fund a project unrelated to FTX. Wang and Singh also had their share of the fraudulent activity, the complaint stated.
Fake Loans and Low-Interest Rates
The filing further revealed that FTX founders SBF and Wang took out $546 million from Alameda in May 2022 and used it to purchase shares of Robinhood Inc. The duo also gave out fake loans to Alameda with an interest rate said to be below commercial standards.
Three of the accused, except SBF, have all pleaded guilty to wire fraud charges in different cases peculiar to the lawsuit. Also, they have promised to comply with law enforcement.
Bankman-Fried now faces new charges after his representatives tried to lessen the charges against him. The lawsuit may also be a plot by FTX to recuperate more funds as it looks to relaunch soon.
