- Failed crypto exchange, FTX is suing the former employees of over $157 million.
- So, the accusation is that these customers made use of their influential roles to get priority during the withdrawal period.
The collapse of the FTX exchange made a lot of things go wrong in the crypto industry. So, many even attribute the current bear market as the doing of the FTX collapse.
FTX Exchange Sues Former Employees
- There’s a new development regarding the FTX crypto exchange and its bankruptcy proceedings at the law court. So, there’s a recent filing from the crypto exchange against some of the former FTX employees in Hong Kong.
- Michael Burgess, Matthew Burgess, Lesley Burgess, Kevin Nguyen, and Darren Wong are the names of the individuals in this lawsuit. So, the problem is that there are accusations that these individuals made use of the connections they had in the FTX exchange to withdraw their money before the collapse. Due to their connections, those within the FTX exchange before the collapse gave them priority treatment over other investors. So, they made the decision to withdraw from FTX when the future of the crypto exchanges became unclear. Moreover, they made withdrawals within the last 90 days before the crypto exchange went down the drain. So, the 90-day period before FTX’s bankruptcy filing on November 11, known as the ‘Preference Period.’ That’s when these groups of investors made their withdrawal.
More Details About The Lawsuit From FTX
- According to the law from the United States, those who made a withdrawal of their assets within 90 days before FTX’s bankruptcy filing aren’t safe. So, from November 11, known as the ‘Preference Period,’ those withdrawing can receive lawsuits to return the money. This is known as the Clawback under the bankruptcy code.
- One thing to note is that the total worth of the assets from these groups of investors was quite massive. So, the total value of these suspected illicit transfers is around $157.3 million. There was a liquidation of a large amount of the total transfer of about $123 million after November 7, 2022. So, one of the investors in this group took a large share of the total transactions. Around $73 million was for Michael Burgess.
Leveraging Connections from FTX Exchange
- The major issue of the filing against these investors is the illegal use of their connections with FTX. So, because of their status as former FTX employees, they know how to get their way around the crypto exchange.
- “They leveraged their connections to FTX Group personnel to ensure that they would be prioritized over other customers,” part of the filing against the former FTX exchange employees said.
Conclusion
Former FTX exchange employees are facing allegations of using their status to get priority when they saw FTX was heading down the drain. So, they made use of their connections around the failed crypto exchange to make withdrawals before other customers. The law provides a platform for the now-bankrupt crypto exchange to sue these customers.
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