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FTX's Legal Battle: Pursuit of $157M from Former Salameda Employees

FTX, the cryptocurrency exchange grappling with bankruptcy, has thrown down the gauntlet
By Josefina Dipaolo
September 26, 2023

FTX, the embattled cryptocurrency exchange, is making headlines once again, this time for filing a lawsuit against former employees of Salameda, a Hong Kong-based entity linked to FTX. The goal: recovering a substantial sum of approximately $157.3 million.

The intricacies of this legal battle are tied to the tumultuous saga of FTX, whose former CEO and founder, Sam Bankman-Fried, currently resides behind bars awaiting trial. Allegations suggest that the accused former employees played a role in the fraudulent withdrawal of assets from FTX shortly before it filed for bankruptcy in November 2022.

Among the defendants are individuals named Michael Burgess, Matthew Burgess, Lesley Burgess, Kevin Nguyen, Darren Wong, and two companies, 3Twelve Ventures and BDK Consulting. These entities are accused of orchestrating deceptive asset withdrawals on both and, capitalizing on a preferential withdrawal scheme available to select customers in the months leading up to the exchange's bankruptcy filing.

FTX contends that these withdrawals were strategically made "with the intent to hinder, delay, or defraud FTX US's present or future creditors."

This lawsuit is just one episode in FTX's ongoing efforts to recoup substantial sums owed to various parties. Earlier this year, FTX revealed a significant debt of $8.7 billion to its customers but managed to reclaim $7 billion in liquid assets. The exchange has been relentless in its pursuit of recovering funds, targeting not only its founder but also his executives, parents, and even the philanthropic and life science divisions of FTX.

The complex legal drama surrounding FTX continues to unfold, highlighting the challenges and controversies faced by cryptocurrency exchanges operating in a rapidly evolving industry. As FTX grapples with these legal battles, the cryptocurrency world watches closely, aware of the broader implications for the sector.

In September, FTX secured court approval to liquidate, invest, and hedge its cryptocurrency holdings, worth a staggering $3.4 billion, in a bid to settle its outstanding debts. This portfolio includes significant holdings in Solana (SOL), Bitcoin (BTC), and Ethereum (ETH), reflecting the exchange's diverse crypto assets.

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