By NewsBTC - 7 months ago - Reading Time: 3 minutes
FTX CEO’s Asset Recovery Escalates As Sam Bankman-Fried Trial Looms
In a battle to recover billions of dollars following the collapse of FTX, Chief Executive and Restructuring Officer John J. Ray III, is intensifying efforts just weeks before FTX founder Sam Bankman-Fried faces trial in what has been labeled one of the largest financial frauds in American history.
Bankruptcy court proceedings kicked off the week as FTX filed a lawsuit against Bankman-Fried’s parents, Allan Joseph Bankman and Barbara Fried.
The suit aims to reclaim millions of dollars allegedly fraudulently transferred and misappropriated by the couple, who purportedly took advantage of their access and influence within FTX to enrich themselves at the expense of debtors and creditors.
Continuing the pursuit of recovery, FTX Trading Ltd. subsequently filed a lawsuit on Thursday against four former employees of Alameda Ltd., an FTX affiliate based in Hong Kong.
The complaint alleges that these employees received $153 million in transfers shortly before the collapse of the crypto trading platform.
According to Bloomberg, these individuals allegedly leveraged personal connections to prioritize the withdrawal of their funds and digital assets from FTX once it became evident that the company was facing financial turmoil.
FTX CEO Ramps Up Efforts To Reclaim Assets
Per Bloomberg’s report, the bankruptcy proceedings have attracted the attention of outside investors and speculators, including prominent distressed-debt investors like Silver Point Capital, Diameter Capital Partners, and Attestor Capital.
These entities have seized the opportunity to acquire discounted FTX claims, anticipating that the protracted bankruptcy process will uncover additional valuable assets.
Court records show that they have already purchased over $250 million worth of FTX debts since the beginning of the year, according to a Bloomberg analysis.
While legal actions are in progress, some funds are being voluntarily returned. Stanford University, where Bankman and Fried held teaching positions and enjoyed reputations as legal scholars, announced its decision to return millions of dollars received from FTX and its associated entities.
According to court documents, Stanford received gifts totaling approximately $5.5 million from FTX-related entities between November 2021 and May 2022.
Bankman-Fried Family Turns To Risky Strategy
According to a Fortune Magazine report, The Bankman-Fried family has adopted a risky strategy in their legal battle, shifting blame onto prominent law firm Sullivan & Cromwell.
They argue that the firm failed to act in its best interests, downplaying its involvement in FTX’s downfall. This move aims to establish an “advice of counsel” defense, painting Sam Bankman-Fried as a well-meaning individual who received “poor legal advice”.
Criticism of Sullivan & Cromwell’s substantial legal fees, exceeding $100 million in the FTX bankruptcy case, raises ethical concerns but not necessarily legal wrongdoing.
Per the report, the family’s strategy may backfire, as it could provide prosecutors with access to new evidence by waiving attorney-client privilege.
Furthermore, the defense’s focus on blaming the law firm invites scrutiny of Bankman-Fried’s father, an active participant in key business decisions. Additionally, Bankman-Fried’s father received $10 million in FTX funds that he has yet to return, potentially for his son’s legal defense.
The Bankman-Fried family’s attempt to discredit Sullivan & Cromwell introduces complexity to the case. However, its effectiveness remains uncertain. As the legal proceedings continue, the implications of these strategies on the case and public perception of the family remain to be seen.
Featured image from Shutterstock, chart from TradingView.com
Original source: NewsBTC