Crypto Legal Battle: FTX Pursues Millions

Martin Walker
Sep 23, 2023 at 11:48 am

In the realm of cryptocurrency turmoil, FTX, the beleaguered exchange teetering on the edge of bankruptcy, has embarked on a legal journey to hold accountable former members of its Hong Kong-based affiliate, Salameda. Their mission: to reclaim a staggering sum exceeding $157 million, a treasure allegedly and surreptitiously diverted by these individuals.

Per intricate documents tendered to the United States Bankruptcy Court for the esteemed District of Delaware, it appears that the accused parties adroitly exploited their affiliations within FTX. This maneuver expedited the processing of withdrawal requests, allowing them to circumvent a sizable backlog. Thus, they managed to siphon off substantial portions of cryptocurrency from their accounts, all before the solemn pronouncement of bankruptcy in the fateful month of November.

FTX Initiates Lawsuit Against Former Staff of Hong Kong Affiliate

FTX, in its quest for justice, has taken legal action against the exalted quartet: Kevin Nguyen, Darren Wong, Michael Burgess, and Matthew Burgess, erstwhile luminaries of the Salameda realm. These once-loyal subjects held exalted positions within the grand tapestry of FTX and Alameda Research. As the annals of January unfurled in 2022, the triumvirate of Michael Burgess, Nguyen, and Wong embarked on a journey to establish myriad ventures, frolicking in the realm of cryptocurrency trading across and FTX.US.

The plaintive party fervently posits that Michael, Nguyen, and Wong wielded influence—both singly and in unison—over a constellation of enterprises, bearing names such as 3Twelve and BDK. These enclaves possessed accounts christened with their own names on the venerable domains of and FTX.US. A symphony of activities ensued, orchestrating a grand financial ballet with trading volumes oscillating betwixt $100 million and a princely $400 million, a magnum opus that resounded from January to the solemnity of November in 2022.

The nefarious trio wallowed in the riches derived from the orchestration of FTX's cryptocurrency transactions. Behold, Wong, in particular, amassed an opulent treasure trove, crossing the gilded threshold of $70 million, reaped from the sale of the coveted FTX Token, known by the moniker FTT, a financial escapade predating the calamitous bankruptcy.

As the whispers of FTX's financial exigency rippled across the fintech landscape, our aforementioned protagonists, Michael, Nguyen, and Wong, undertook a scurrying exodus, a virtual scramble alongside a multitude of the exchange's esteemed patrons, all vying for the withdrawal of their digital assets. Even as the mounting backlog of withdrawal requests threatened to engulf the exchange in bureaucratic mire, the defendants adeptly wielded their relationships with FTX's august staff. They basked in the glory of preferential treatment, an elite status accorded amidst the digital plebeians.

In that hour of desperation, Matthew, yet donning the mantle of an FTX custodian, indulged in a masquerade, adroitly presenting Michael's accounts as his own, thereby hastening the withdrawal protocols.

An entreaty to Repudiate the Accused

Matthew, an active participant in this crypto-theatrical drama, vigorously advocated for the prioritization of accounts bearing the insignia of Lesley Burgess—a name shared by both him and Michael, denoting their matrilineal bond—above those of the unsuspecting masses. This stratagem was executed with panache, culminating in the successful withdrawal of cryptocurrency assets sumptuously valuing $157.3 million, all prior to FTX's directive to suspend withdrawal operations on the solemn day of November 8.

In this litigious odyssey, the plaintiffs vehemently implore for the restoration of assets, spirited away with preferential elegance to the defendants. Their clarion call echoes the desire to nullify any claims staked by these individuals until the restitution of the pillaged coffers. FTX, stalwart in its pursuit of justice, also beseeches for recompense in the form of attorney's fees, both pre- and post-judgment interests, and the financial burdens borne in the quest for legal vindication.

Read more: Crypto Debt Market Surges: FTX Claims Trend

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