The troubled cryptocurrency exchange FTX is intensifying its legal battles in the aftermath of its significant collapse, this time targeting Ryan Salame, the former co-CEO of its Bahamian subsidiary. A recent court filing, dated November 4, reveals that FTX is seeking to reclaim nearly $98.8 million in cash and cryptocurrencies from Salame. This dramatic step comes amid serious accusations that Salame played a key role in aiding other top executives, particularly the notorious founder Sam Bankman-Fried, in violating their fiduciary duties and misappropriating customer funds.
FTX’s lawsuit paints Salame as a central figure in what it describes as a “series of interconnected frauds” that plagued the company. The exchange asserts that Salame attempted to disguise the flow of misappropriated assets, thereby reaping extensive benefits during his tenure. The firm argues that there is substantial evidence indicating that Salame not only knew of these wrongdoings but actively participated in them.
The financial implications of the allegations against Salame are staggering. Between November 2020 and November 2022, Salame reportedly extracted over $52.9 million through wire transfers along with an additional $29.8 million from cash withdrawals and crypto, in addition to receiving approximately $7.7 million in salary and bonuses. This lavish financial extraction led Salame to acquire nine million FTT tokens, a significant portion of which he later sold for around $24 million. He then apparently directed these earnings toward a lifestyle characterized by extravagant expenses, including luxury vehicles, diverse business investments, and a notable stake in the RedBird Capital Partners Fund IV.
These revelations underscore the lengths to which Salame may have gone to protect and augment his personal wealth at the expense of FTX and its clients. FTX’s lawsuit highlights specific instances where funds were misappropriated, including a $5 million withdrawal on November 7, 2022, which allegedly funded personal expenditures such as PR services and luxury items.
The legal troubles haven’t helped Salame escape scrutiny; he recently commenced a 90-month prison sentence stemming from his guilty plea relating to conspiracy charges associated with unlawful political contributions and violations against the Federal Election Commission. To add to his woes, Salame agreed to forfeit a whopping $1.5 billion and must adhere to three years of supervised release following his prison term. Furthermore, the court has ordered him to pay over $6 million in forfeitures along with $5 million in restitution.
FTX has made it explicitly clear that it intends to pursue all assets acquired by Salame during this tumultuous period, which allegedly span multiple high-value locations, including Connecticut, Miami, Portugal, Hong Kong, and Bali. Through this aggressive litigation, FTX aims not only to recover its funds but also to send a pointed message to others connected to the firm’s downfall. The ongoing legal battles of FTX illustrate the broader implications of corporate governance failures within the rapidly evolving landscape of cryptocurrency exchanges and highlight the importance of accountability among executives. As investigations continue, the ramifications of this scandal will likely echo throughout the financial world for years to come.
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