The FTX estate is taking legal action to recover over $1 billion in cash and shares from founder Sam Bankman-Fried and other executives, alleging that they used their close control over the FTX Group’s businesses and systems to perpetrate what it calls a massive fraud between February 2020 and November 2022. According to the filing, FTX issued more than $725 million worth of equity to Bankman-Fried, former CTO and Co-Founder Gary Wang, Director of Engineering Nishad Singh, and former Alameda Research CEO Caroline Ellison. The lawsuit claims that no one paid for the shares, and no one intended to do so. It also alleges that FTX transferred $4.86 million to the group in order to purchase real estate, and Bankman-Fried’s father, Allen Joe Bankman, received $10 million from Alameda to be used for legal expenses. Additionally, Gabriel Bankman-Fried, Sam’s brother, planned to purchase the nation of Nauru with FTX Foundation funds, and more than $100 million in political donations to both parties and political action committees were made from funds mixed with FTX customer money. Caroline Ellison, who has a plea agreement with the U.S. Attorney’s Office of the Southern District of New York, is accused of awarding herself a $22.5 million bonus at the height of FTX’s crisis last November. The U.S. Department of Justice has asked a court to silence Bankman-Fried from making out-of-court statements about the case after he leaked Ellison’s private diary to the New York Times.
The new lawsuit, filed Thursday, alleges that the defendants used their close control over the FTX Group’s businesses and systems to perpetrate what it calls a massive fraud, said the FTX estate.