FTX files 50 lawsuits for $1B to recover funds lost due to Bankman-Fried's fraud
30 of these lawsuits were filed in the last 10 days
FTX is trying to recover over $1 billion in funds lost due to Sam Bankman-Fried's excessive generosity and fraudulent actions.
As of November 8, the administrator of the bankrupt cryptocurrency exchange FTX has filed over 50 lawsuits against various organizations and individuals, aiming to recover the exchange's funds.
According to Cryptopolitan, 30 of these lawsuits were filed in the last 10 days, mostly related to political action committees (PACs) supporting both the Republican and Democratic parties in the U.S.
According to crypto investor Thomas Braziel, U.S. bankruptcy law allows for the recovery of charitable donations made with the intent to defraud creditors or when funds were donated by an insolvent donor. However, in the case of FTX, not all donations can be recovered, and many lawsuits may be driven by lawyers seeking to earn more money by filing more motions in court.
Nevertheless, if all the courts approve FTX’s lawsuits in all the proceedings, the exchange could recover over $55 million.
Among FTX's non-political opponents in court are the developer of the video game Storybook Brawl, which was acquired by Sam Bankman-Fried in March 2022. The company closed in 2023 after FTX’s bankruptcy but had previously received $22 million in investments from FTX and an additional $2 million in salaries and bonuses.
In addition to Storybook, FTX sued Jean Chalopin, the chairman of Deltec Bank, seeking to recover $11.5 million invested in the banking holding FBH Corporation, led by Chalopin. FTX also filed a lawsuit against American financier Anthony Scaramucci.
Trader who defrauded FTX of over $1 billion
However, the most significant harm to FTX was caused by market manipulation on the cryptocurrency market, orchestrated by a trader using the pseudonym Meerun.
This person bought about half of the supply of the BMTX token associated with the Bitmax exchange in 2021, increasing the token's value by more than 10,000% and then borrowed hundreds of millions of dollars from FTX using BMTX tokens as collateral.
Although Bitmax warned FTX about the incident, FTX took no action, allowing Meerun to manipulate several tokens, earning more than $1 billion in profits. At the same time, FTX’s losses were transferred to Alameda Research.
Meerun’s identity was established after he filed a lawsuit against FTX, trying to recover $12 million from the exchange as part of the bankruptcy proceedings. This same individual was identified as Humpty the Whale, who attacked the DeFi protocol Aave in an attempt to withdraw $20 million.
Read also: Crypto fraud losses surge 9.5% to $753 million in Q3 2024, with phishing attacks leading the way
