FTX Ramps Up Legal Actions With 20 Lawsuits Targeting Political Donations and Fraud

On November 8, the administrator overseeing FTX’s bankruptcy filed more than 20 new lawsuits, ramping up legal actions against several entities.

These lawsuits indicate a concerted effort by FTX to recover assets from multiple companies and individuals. Since November 2022, the FTX Debtors have filed 51 adversary actions, with 30 of them occurring in recent weeks.

FTX Targets $1 Billion in Losses With New Lawsuits

According to documents from the FTX bankruptcy docket, most of the latest filings address various claims, including political contributions, the defunct exchange philanthropic efforts, investments, and allegations of market fraud and manipulation.

“FTX is going after dozens of left leaning groups for all the donations that were made fraudulently with customer money,” an FTX creditor stated.

Thomas Braziel, founder of 117 Partners, stated that FTX might reclaim some donations under US bankruptcy law. He noted that funds can be recovered if they were donated with fraudulent intent or lacked equivalent value. Also, donations made while the donor was insolvent are particularly at risk of being clawed back.

“Not all donations are immune. Bankruptcy trustees will look closely at the debtor’s intent, timing, and financial condition when deciding if a charitable transfer can be clawed back,” Braziel said.

FTX New Lawsuits. Source: X/SFTXunil Kavuri

In addition to the non-profits, the failed exchange legal team is pursuing other prominent figures and entities. The estate has filed a lawsuit against former White House Communications Director Anthony Scaramucci and his company, seeking damages of more than $100 million. Another suit targets the team behind Storybook Brawl, a video game that FTX co-founder Sam Bankman-Fried invested in and promoted.

FTX also filed a significant clawback lawsuit against Nawaaz Mohammad Meerun, known as “Humpy the Whale,” who allegedly caused over $1 billion in losses through market manipulation. Earlier this year, Humpy led a governance attack on the DeFi protocol Compound Finance, causing significant losses for the platform.

“Meerun also repeatedly violated FTX’s rules, forcing Alameda to take over Meerun’s risky positions and suffer hundreds of millions of dollars in additional losses. All told, FTX and Alameda suffered approximately $1 billion in losses due to Meerun’s crimes, and Meerun has used the proceeds of his exploits to fund a wide range of other criminal activity,” FTX alleged.

These legal actions reflect FTX’s increasing efforts to recover assets from numerous individuals and companies. Over the past week, the exchange has filed legal actions against major centralized exchanges like Crypto.com and KuCoin over funds belonging to the platform.

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