FTX opens lawsuit against former employees of Hong Kong affiliate

Defunct cryptocurrency exchange FTX filed a lawsuit on Sept. 21 against former employees of the Hong Kong-incorporated company Salameda, which was previously affiliated with the FTX group, according to court documents.

The court filing says FTX seeks to recover $157.3 million that it claims was fraudulently withdrawn in the hours before the exchange filed for bankruptcy.

According to the filing, Michael Burgess, Matthew Burgess and their mother, Lesley Burgess, as well as Kevin Nguyen and Darren Wong, along with two other companies, allegedly held ownership of companies with registered accounts on FTX.com and FTX US and withdrew funds in the “preference period” before FTX’s bankruptcy filing.

The court filing 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 also highlights that these transfers were completed hours before FTX halted all non-fiat user withdrawals on Nov. 8, 2022.

It alleges Mathew Burgess pressured FTX employees to “push out” particular pending withdrawal requisitions “from one of Michael Burgess’s FTX US exchange accounts, while misrepresenting the account to be his own,” citing messages on Slack as proof.

Related: Binance and CEO Changpeng Zhao ask court to dismiss SEC suit

This development comes as former FTX CEO Sam Bankman-Fried (SBF) sits in jail awaiting the first of his two-part trial, which is set to begin on Oct. 3, 2023. The second trial is scheduled for March 2024. 

On Sept. 21, judges decided against granting SBF early release from jail. He argued he couldn’t adequately prepare for trial from jail and said it violated his First Amendment rights under the United States Constitution.

On the same day, Judge Lewis Kaplan granted a motion proposed by the Department of Justice that bars the testimony of SBF’s key witnesses.

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