© Reuters. FILE PHOTO: Sam Bankman-Fried, the founder and former CEO of crypto currency exchange FTX, is escorted out of the Magistrate Court building in Nassau, Bahamas December 21, 2022. REUTERS/Marco Bello/File Photo
By Jonathan Stempel
(Reuters) -FTX Trading Ltd on Thursday sued founder Sam Bankman-Fried and other former executives of the cryptocurrency exchange, seeking to recoup more than $1 billion they allegedly misappropriated before FTX went bankrupt.
The complaint filed in Delaware bankruptcy court also names as defendants Caroline Ellison, who led Bankman-Fried’s Alameda Research hedge fund; former FTX technology chief Zixiao “Gary” Wang; and former FTX engineering director Nishad Singh.
FTX said the defendants continually misappropriated funds to finance luxury condominiums, political contributions, speculative investments and other “pet projects” while committing “one of the largest financial frauds in history.”
The alleged fraudulent transfers occurred between February 2020 and November 2022 when FTX filed for Chapter 11 protection, and can be undone–or “avoided”–under the U.S. bankruptcy code or Delaware law, FTX said.
A spokesman for Bankman-Fried declined to comment. Lawyers for the other defendants did not immediately respond to requests for comment.
U.S. prosecutors have said that Bankman-Fried was the mastermind of a fraud that led to FTX’s collapse and included the misappropriation of billions of dollars of customer funds.
Bankman-Fried has pleaded not guilty to several criminal charges. Ellison, Wang and Singh have pleaded guilty and agreed to cooperate with prosecutors.
