FTX seeks $157.3M in legal action against former employees from Hong Kong affiliate FTX seeks $157.3M in legal action against former employees from Hong Kong affiliate
FTX alleged that the defendants engaged in fraudulent and preferential asset withdrawals fromits platform.
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Updated: Sep. 22, 2023 at 12:42 pm UTC
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FTX has filed a legal action to recover $157.3 million from the former employees of its Hong Kong affiliate, Salameda, according to a Sept. 21 court filing.
The insolvent exchange named former Salameda staffers Michael Burgess, Lesley Burgess, Kevin Nguyen, Darren Wong, and Matthew Burgess as the defendants. The legal action also encompasses 3Twelve Ventures Ltd and BDK Consulting Ltd, firms associated with certain defendants.
FTX alleged that the defendants engaged in fraudulent and preferential asset withdrawals from both FTX and FTX.US, a troubling occurrence transpiring 90 days prior to the exchange’s initiation of bankruptcy proceedings.
Among these were Michael Burgess, Nguyen, and Wong, who had formally disassociated themselves from FTX Group and its affiliate in Jan. 2022. Nevertheless, they continued actively trading cryptocurrency assets on the FTX and FTX.US platforms, conducting transactions via personal and corporate accounts throughout 2022, with an average monthly trading volume exceeding $100 million.
As news regarding FTX’s potential insolvency circulated, Michael Burgess, Nguyen, and Wong were part of a cohort of customers striving to withdraw their assets. FTX asserted that they utilized their connections with other FTX group employees to facilitate these asset withdrawals.
Significantly, one of the defendants, Matthew Burgess, held an employment position within FTX during this period and played a central role in expediting pending withdrawal requests. This included asserting ownership over one of Michael Burgess’s FTX US accounts. Notably, Matthew Burgess allegedly leveraged his position as an employee to expedite withdrawals for his brother, Michael, and his mother, Lesley.
Meanwhile, this lawsuit marks the second effort by the FTX estate liquidator this week to recover assets. Previously, they filed a suit against Joseph Bankman and Barbara Fried, the parents of Sam Bankman-Fried. The aim is to reclaim millions, with FTX alleging that they profited from their son’s fraudulent activities and leveraged their connections and sway within the FTX Group.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.