The debtors of FTX, Alameda and West Realm Shires have filed a complaint to “recover damages caused by breaches of fiduciary duties, legal malpractice and other wrongdoing, and to recover fraudulent transfers.”
Former CEO Sam Bankman-Fried, co-founder Gary Wang, engineering director Nishad Singh, Alameda CEO Caroline Ellison, and regulatory officer Daniel Freidberg were all named in the complaint.
The complaint alleges that “Friedberg directed the preparation of bank account opening documents with false statements, silenced whistleblowers, and supported the fraudulent transfers that enriched Bankman-Fried and other FTX Insiders contrary to the interests of the entities to which Friedberg owed fiduciary duties.”
The filing goes so far as to describe Friedberg as Bankman-Fried’s “fixer.”
In a report earlier this week, CEO John J. Ray and lawyers representing FTX debtors found that senior executives at FTX commingled and misused customer deposits.
An unnamed “senior FTX Group attorney” was named in the Monday filing, alleging that the attorney and others “lied to banks and auditors, executed false documents, and moved the FTX Group from jurisdiction to jurisdiction, taking flight from the United States to Hong Kong to the Bahamas, in a continual effort to enable and avoid detection of their wrongdoing. In doing so, they showed little of the concern for customers that they publicly professed.”
However, Friedberg is not directly named, and there’s no direct indication within the filing that Friedberg is the unnamed attorney.
The debtors have been able to recover $7 billion, though they note that FTX still owes $8.7 billion to customers.
But there’s also good news for customers, who could be one step closer to recouping money.
The claims website for FTX says that the claims portal “will be launched once the Court Order is signed related to the Motion on or around July 3, 2023.”
“Customer claims shall only include claims against the Debtors and not against any non-Debtors, including any of the founders of the Debtors, including Samuel Benjamin Bankman-Fried, Gary Wang, Nishad Singh and Caroline Ellison,” a June 14 filing stated.
A June 28 filing granted the relief motion and established Sept. 29 “as the deadline for each person or entity (including individuals, partnerships, corporations, joint ventures and trusts) holding a Customer Claim (as defined below) to file a proof of claim.”
The Wall Street Journal also reported that FTX has begun talks on a reboot and included a quote from John J. Ray saying that the company “has begun the process of soliciting interested parties to the reboot of the FTX.com exchange.”
Blockworks previously reported that FTX debtors will face hurdles if they attempt to relaunch the defunct exchange.
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Source: https://blockworks.co/news/former-ftx-regulatory-officer-served