The latest report revealed that Alameda Research and West Realm Shires (WRS) jointly sued Sam Bankmam-Fried and some former FTX executives. The defendants were reportedly accused of simulating the prices of a stock platform deal shortly before FTX collapsed.
According to the lawsuit, the accused FTX’s ex-officials deliberately manipulated trades and illegally used some funds belonging to clients. The United States laws prohibit and consider such actions offensive and illegal, as stated in the lawsuit.
Some of the accused executives were Sam Bankman-Fried, Caroline Ellison, Zixiao Wang, and Nishad Singh. They executed multiple transactions, using the firm’s funds to fund personal investments.
According to the report, ex-CEO of FTX, Sam, and his cohorts collectively misappropriated funds from FTX Group. They reportedly bought ownership shares in Embed Financial Technologies Inc. platform with the funds they stole.
Meanwhile, West Realm Shires (WRS) firm had previously acquired Embed Financial Technologies Inc. and its subordinate, Embed Clearing LLC, last year. In addition, the complainants said that the ex-officials of FTX urged WRS to hand out Simple Agreements for Future Equity (SAFEs) to Singh, Wang, and SBF.
The report revealed that in the case of Chapter 11 bankruptcy filing, holders could easily convert their SAFEs to WRS stock. However, the commitments and conversion of the SAFEs can be legally revoked or snubbed under Delaware and Bankruptcy protocols.
Defendants Charged With FTX Funds Misappropriation
In December last year, Caroline Ellison and Zixiao Wang reportedly pleaded guilty to the fraud accusations before the federal court. Other defendants are yet to comment on the accusation, according to the lawsuit.
In addition, the plaintiff also accused the defendants of falsifying documents to conceal Alameda’s role in funding the acquisition of shares. The lawsuit also claimed that they preplanned the purchase to end shortly before the FTX exchange would collapse and file for a Chapter 11 bankruptcy case.
Additionally, the court filing claimed that the accusers transferred funds to a WRS account from an Alameda bank account, disguising it as a personal transaction. And after the acquisition, potential bidders started offering lower than the purchase price to the debtors.
The plaintiffs claimed that the defendants inflated the $220 million WRS used in acquiring Embed. They added that the accusers knowingly tampered with the transactions and obligations to defraud and deceive investors.
Meanwhile, the current chairman of the troubled FTX, John J. Ray III, a US attorney, has sued the formal officials of the bankrupt FTX exchange. The lawyer is famous for his expertise in helping victims of bankrupt businesses to recover their funds, as evident in his previous cases.
FTX Collapse Case Still Active As SBF Denies Allegations
Meanwhile, reports revealed that the legal team representing Sam Bankman-Fried has reportedly submitted a petition seeking the court to dismiss most of the fraud charges against him, leaving out some.
Interestingly, the defendant’s plea omitted some of the most significant charges against him. To bolster his defensive argument, SBF is reportedly using a Supreme Court protocol that restricts the scope of fraud accusations.
Generally, the FTX collapse saga is still active as FTX investors who lost their funds are still suing every entity associated with propagating the firm before it collapsed. For instance, some investors have charged Shaquille O’Neal, a former NBA player, to court.
The popular celebrity was accused of his role in advertising and promoting FTX before it collapsed. However, the necessary document to establish the lawsuit in court is still incomplete. Hence, the case against the NBA star remains pending.