FTX Ramps Up Asset Recoveries Under Legal Scrutiny
FTX has ramped up its asset recoveries under legal scrutiny as its founder Sam Bankman-Fried prepares for his October trial.
Led by FTX CEO and restructuring officer John G. Ray, the company aims to recover billions of dollars lost.
In a recent development, the stock exchange has initiated legal proceedings against Bankman Fried’s parents. The lawsuit accused Alan Joseph Bankman and Barbara Freed of embezzling “millions of dollars” by exploiting their family connections and influence within the company, thus defrauding creditors and stakeholders.
FTX chases money across borders
In addition, FTX Trading Ltd has targeted former partners in Hong Kong with legal action. The company is seeking to recover assets worth $153 million from four former employees of Salamida Limited, a Hong Kong-based subsidiary. These individuals were allegedly given preferential treatment for their funds and digital assets when the platform’s financial instability became apparent last fall. The complaint was filed in the U.S. Bankruptcy Court for the District of Delaware.
Prominent distressed debt investors have not shied away from the unfolding drama. Firms like Silver Point Capital, Diameter Capital Partners, and Atestor Capital have taken on more than $250 million in FTX debt since the beginning of the year. These companies are betting that the protracted bankruptcy proceedings will uncover additional profitable assets, as a Bloomberg examination of the court record revealed.
But lawsuits are not the only way to recover assets. In a somewhat surprising move, Stanford volunteered to repay several million dollars it had received from FTX and its related entities. These donations, amounting to approximately US$5.5 million, were made between November 2021 and May 2022; Bankman-Fried’s parents were professors at Stanford Law School.
As the Bankman-Fried trial approaches, FTX is leaving no stone unturned in its aggressive pursuit of the missing assets. With billions at stake, and the eyes of the financial world watching closely, the outcome of these legal endeavors may very well determine the future of centralized exchanges and the broader landscape of the cryptocurrency industry.