FTX Legal Battle Unveiled: Pursuit of Millions

Martin Walker
Sep 22, 2023 at 12:17 pm

FTX, a now-defunct cryptocurrency exchange, made its legal move on the 21st of September, initiating legal action against former staff members of Salameda, a Hong Kong-incorporated company with prior affiliations to the FTX group, as outlined in meticulously detailed official court records.

The lawsuit strongly asserts FTX's unwavering intent to reclaim a staggering $157.3 million, purportedly withdrawn through allegedly fraudulent means, just before the unfortunate moment when the exchange was compelled to declare insolvency.

Delving into the intricacies of the submitted legal documents, it becomes apparent that Michael Burgess, Matthew Burgess, and their mother, Lesley Burgess, alongside Kevin Nguyen and Darren Wong, together with two additional business entities, had purported ownership of firms boasting registered profiles on both FTX.com and FTX US. These implicated entities stood accused of orchestrating fund withdrawals during what is ominously referred to as the "preference period," immediately preceding FTX's regrettable insolvency filing.

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.

The court documents further highlight and emphasize the timing of these transactions, revealing that they were executed with an air of urgency mere hours before FTX took the regrettable step of suspending all non-fiat user withdrawals on that fateful date of November 8, 2022.

Moreover, the legal filing strategically weaves in allegations against Mathew Burgess, painting a picture where he is portrayed as having exerted undue pressure on FTX staff to accelerate specific pending withdrawal requests, intriguingly linked to one of Michael Burgess's FTX US exchange accounts. The twist lies in the claim that Mathew Burgess deceptively presented this account as his own, a fact substantiated by a string of messages exchanged on the Slack platform.

This unfolding legal saga is set against the backdrop of former FTX CEO, Sam Bankman-Fried (SBF), finding himself incarcerated, biding his time as he awaits the commencement of the first segment of his two-part trial, set to unfurl on the anticipated date of October 3, 2023. The subsequent trial, poised on the horizon, awaits its moment in March 2024.

In an unexpected turn of events on that very same September 21, the halls of justice resounded with the echoing decision denying SBF's plea for early release, propelling an argument that he, ensconced within the confines of a jail cell, couldn't adequately prepare for the impending trial, an argument fortified by the assertion that this situation amounted to a grave violation of his First Amendment rights under the hallowed United States Constitution.

Coincidentally, and adding yet another layer of intrigue to this legal tapestry, the esteemed Judge Lewis Kaplan, on that selfsame date, bestowed his judicial imprimatur upon a motion thoughtfully proposed by the illustrious Department of Justice. This motion, standing as a formidable barrier, effectively blocked the potential testimony of key witnesses intricately entwined with the saga of SBF.

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