FTX Pursues $157.3M Legal Action Against Former Hong Kong Affiliate Employees

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Key takeaways:

  • According to court records, the now-defunct cryptocurrency exchange FTX sued former Salameda staff members on September 21.
  • It emphasizes that these transfers were finished hours before FTX stopped allowing withdrawals from non-fiat users on November 8, 2022.

According to court records, the now-defunct cryptocurrency exchange FTX sued former Salameda staff members on September 21. Salameda was a subsidiary of the FTX business and had previously been linked with it.

In a court document, FTX claims that $157.3 million was fraudulently removed just hours before the exchange filed for bankruptcy, and it is seeking to reclaim that money.

The filing claims that Kevin Nguyen, Darren Wong, Lesley Burgess, Michael Burgess, and Matthew Burgess, along with two other companies, were the owners of companies that had registered accounts on FTX.com and FTX US and had withdrawn money during the “preference period” prior to FTX’s bankruptcy filing. The court document reads:

“Each of these transfers to Defendant Michael Burgess was made with the intent to hinder, delay or defraud FTX US’s present or future creditors.”

It further emphasizes that these transfers were finished hours before FTX stopped allowing withdrawals from non-fiat users on November 8, 2022.

It is significant to note that during this time, one of the defendants, Matthew Burgess, worked for FTX and was instrumental in hastening pending withdrawal petitions. 

One of Michael Burgess’s FTX US accounts was claimed as being owned throughout this process. Particularly noteworthy is the claim that Matthew Burgess used his influence as an employee to hasten the withdrawals of his mother, Lesley, and brother Michael.

It claims Mathew Burgess misrepresented his ownership of the FTX US exchange account to “push out” certain outstanding withdrawal requests. It provides evidence in the form of messages on Slack.

This development occurs as Sam Bankman-Fried (SBF), the former CEO of FTX, waits in jail for the start of his two-part trial on October 3, 2023. March 2024 is the scheduled date for the second trial. 

Judges rejected SBF’s request for an early release from prison on September 21. He claimed that being imprisoned prevented him from effectively preparing for his trial and that this was a violation of his First Amendment rights under the US Constitution.

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