On September 21st, the defunct cryptocurrency exchange FTX initiated legal action against former employees affiliated with the Hong Kong-incorporated entity Salameda, which was once part of the FTX group.
According to court documents, FTX has launched this lawsuit with the aim of reclaiming $157.3 million, alleging that this substantial sum was fraudulently withdrawn just hours before the exchange filed for bankruptcy.
The court filing specifically names Michael Burgess, Matthew Burgess, their mother Lesley Burgess, along with Kevin Nguyen and Darren Wong, in addition to two other corporate entities.
These individuals and entities are alleged to have held ownership of companies with registered accounts on FTX.com and FTX US.
The lawsuit contends that they withdrew funds during the “preference period,” a critical juncture preceding FTX’s bankruptcy declaration.
The court documents assert that these transfers to Defendant Michael Burgess were executed with the intent to obstruct, delay, or defraud the present or future creditors of FTX US.
Notably, these transactions occurred mere hours before FTX suspended all non-fiat user withdrawals on November 8, 2022.
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The lawsuit further alleges that Matthew Burgess applied pressure on FTX employees to expedite specific pending withdrawal requests from one of Michael Burgess’s FTX US exchange accounts, while misleadingly representing the account as his own.
This assertion is substantiated with messages exchanged on the communication platform Slack.
In a parallel development, the former CEO of FTX, Sam Bankman-Fried (SBF), currently finds himself incarcerated and awaiting the commencement of his two-part trial.
The first phase is slated to begin on October 3, 2023, with the second following in March 2024.
SBF had sought early release from detention, citing difficulties in adequately preparing for his trial while in jail and alleging that it infringed upon his First Amendment rights under the United States Constitution.
However, on September 21st, the judiciary ruled against granting him early release.
Furthermore, on the same day, Judge Lewis Kaplan upheld a Department of Justice motion, barring the testimony of SBF’s key witnesses.
This legal landscape underscores the complexity and high-stakes nature of the ongoing legal proceedings surrounding FTX and its former executives.
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