FTX Pursues $157.3M Legal Action Against Former Hong Kong Affiliate Employees
FTX, a cryptocurrency exchange, has taken legal action to recover a substantial sum of $157.3 million from former employees of its Hong Kong affiliate, Salameda. This move comes as a response to a September 21 court filing.
The legal action, initiated by the insolvent exchange, specifically targets individuals who were once part of the Salameda team. These individuals include Michael Burgess, Lesley Burgess, Kevin Nguyen, Darren Wong, and Matthew Burgess. Additionally, the legal proceedings encompass 3Twelve Ventures Ltd and BDK Consulting Ltd, which are associated with certain defendants.
FTX's allegations revolve around claims of fraudulent and preferential asset withdrawals. These actions, it is alleged, were carried out from both FTX and its U.S. counterpart, FTX.US. Importantly, these withdrawals occurred within 90 days before FTX's declaration of bankruptcy.
Among the accused, Michael Burgess, Nguyen, and Wong had officially severed their ties with FTX Group and its affiliate in January 2022. However, they continued actively trading cryptocurrency assets on the FTX and FTX.US platforms. They conducted these transactions using personal and corporate accounts throughout 2022, with an average monthly trading volume exceeding $100 million.
As news spread about FTX's potential insolvency, Michael Burgess, Nguyen, and Wong were part of a group of customers attempting to withdraw their assets. FTX alleges that they leveraged their connections with other FTX group employees to facilitate these asset withdrawals.
Of particular significance is the involvement of Matthew Burgess, one of the defendants. Matthew held an employment position within FTX during this period and played a central role in expediting pending withdrawal requests. This included taking control of one of Michael Burgess's FTX US accounts. It is noteworthy that Matthew Burgess is alleged to have used his position as an employee to accelerate withdrawals for his brother, Michael, and his mother, Lesley.
This lawsuit represents the second attempt this week by the FTX estate liquidator to recover assets. Previously, a suit was filed against Joseph Bankman and Barbara Fried, the parents of Sam Bankman-Fried, with the aim of reclaiming millions. FTX contends that they profited from their son's fraudulent activities and utilized their connections and influence within the FTX Group for personal gain.