FTX Files Lawsuit Against Former Employees for Alleged Asset Misappropriation

The block reports that, bankrupt cryptocurrency exchange FTX has taken legal action against former employees of its Hong Kong affiliate, Salameda, for the alleged preferential or fraudulent transfer of assets, seeking to recover approximately $157.3 million in a court filing.

FTX’s filing, dated Thursday, names Michael Burgess, Kevin Nguyen, Darren Wong, and Matthew Burgess as the defendants, along with Lesley Burgess and two other FTX-affiliated firms. According to the court document, these individuals and entities are accused of engaging in preferential or fraudulent withdrawals from FTX in the 90-day period leading up to FTX’s Chapter 11 bankruptcy filing in November.

Based on evaluations as of August 31, 2023, the assets in question amount to a collective value of about $157.3 million. Significantly, over $123 million of this sum, based on the same valuation, was withdrawn after November 7, with a substantial portion allegedly funneled to Michael Burgess under questionable circumstances.

The filing further alleges that Matthew Burgess, at the time an employee of FTX Group, orchestrated a scheme wherein pending withdrawal requests from one of Michael Burgess’s FTX US exchange accounts were expedited, all while misrepresenting the account as his own.

Lesley Burgess, the mother of Michael Burgess and Matthew Burgess, is also implicated in the case. It is asserted that she took advantage of her connections within the company, successfully withdrawing assets just hours prior to FTX.com halting withdrawals on November 8, 2022.

This legal action adds another layer of complexity to the ongoing bankruptcy proceedings of FTX and underscores the challenges faced by the cryptocurrency industry in navigating issues of misappropriation and fraud within its ranks.

Both FTX and the defendants named in the lawsuit are expected to present their respective cases in the coming legal proceedings. This case will be closely monitored by industry experts and stakeholders for its potential implications on the future of cryptocurrency exchanges and the broader blockchain ecosystem.

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