On July 20, the FTX exchange, which went bankrupt in November 2022, filed a billion-dollar lawsuit against its former executives, including ex-CEO Sam Bankman-Fried, former Alameda Research CEO Caroline Ellison, and FTX co-founder Gary Wang. The lawsuit accuses them of engaging in fraudulent and illegal behavior that ultimately led to FTX's bankruptcy. Specifically, they are alleged to have systematically misappropriated customer funds to finance luxurious lifestyles and speculative investments.
One of the most interesting accusations in the filing is related to the ex-CEO’ alleged self-dealing. FTX claims that Sam Bankman-Fried was involved in a high-profile instance of transferring $10 million from FTX funds to his father, Joseph Bankman, a renowned law professor at Stanford University. The lawsuit contends that these funds are now being used to finance Bankman-Fried's criminal defense against numerous accusations he is facing.
Additionally, there is a remarkable assertion that Sam Bankman-Fried’s younger brother, Gabriel, had plans to purchase the sovereign nation of Nauru using FTX Foundation funds.
Furthermore, Bankman-Fried and Gary Wang have been accused of diverting $546 million to buy shares in the trading platform Robinhood. Meanwhile, Caroline Ellison is alleged to have paid herself $28.8 million in bonuses and invested $10 million in an artificial intelligence company.
The legal filing also suggests that many of these questionable dealings occurred while FTX was insolvent, and the defendants reportedly were fully aware of this financial situation.