The authorized woes of Sam Bankman-Fried and his ex-girlfriend over the multi-billion greenback collapse of FTX have deepened after a lawsuit filed in California demanded damages over ‘one of many largest frauds in US historical past’.
Bankman-Fried and Caroline Ellison, his former on-off lover who lived with the disgraced crypto mogul in his $40 million Bahamas penthouse, are named in a category motion swimsuit which additionally targets fellow FTX executives Gary Wang and Nishad Singh.
The case additionally names US accountancy corporations Armanino and Prager Metis as defendants, alleging they produced stories that ‘discovered the FTX Entities to be in good monetary well being’ and made ‘cheerleading’ statements ‘in help of Bankman-Fried and the FTX Entities’.
The swimsuit was filed on Tuesday, the identical day Bankman-Fried, 30, appeared in a New York court docket and denied eight fees over the collapse of FTX.
The lawsuit was filed on January 3, the identical day Bankman-Fried appeared in a New York court docket and denied eight fees, together with fraud, over the collapse of FTX, his failed crypto platform
His ex-girlfriend, Caroline Ellison, can also be named within the swimsuit, which calls for damages for what legal professionals have described as ‘one of many largest frauds in US historical past’
Nishad Singh (left) and Gary Wang are additionally named within the class motion lawsuit filed in California
The corporate collapsed after lending billions of {dollars} in shopper funds to a different of Bankman-Fried’s corporations, Alameda Analysis, which was run by Ellison, 29. Alameda is {accused} of squandering the belongings on dangerous investments which did not repay.
In paperwork for the swimsuit filed in California, seen by DailyMail.com, legal professionals demand damages for FTX prospects over claims together with fraud, negligent misrepresentation and civil conspiracy.
It provides: ‘As alleged herein, and being at the moment spilled out within the parade of actions being pursued towards Bankman-Fried, Ellison and Wang, the FTX Entities had been operated basically as a Ponzi scheme.’
The 14-count swimsuit describes the scandal because the ‘FTX home of playing cards that has now tumbled down in one of many largest frauds in U.S. historical past’.
Attorneys accused a number of of the opposite authorized instances towards FTX and likewise word damning assessments of the agency made throughout its chapter proceedings.
The FTX founder and Ellison had been on-off lovers, however their relationship seems in tatters after she struck a plea cope with authorities who’re pursuing fraud fees towards Bankman-Fried. The pair are pictured collectively at a party for Bankman-Fried
Detailing the claims towards the accountancy corporations, the legal professionals add: ‘A key element of the extremely profitable promotional advertising marketing campaign included the air of legitimacy that the Auditor Defendants’ purported auditing work and different supportive statements.’
Armanino and Prager are mentioned to have ‘issued licensed stories that purportedly discovered the FTX Entities to be in good monetary well being’.
‘Armanino and Prager every printed what have been coined within the press as “cheerleading” statements in help of Bankman-Fried and the FTX Entities in 2021 and 2022,’ the case alleges.
‘These “cheerleading” statements negate any declare of auditor independence by both of the Auditor Defendants’. Attorneys seek advice from ‘quite a few purple flags’ allegedly ‘dangled in entrance of’ the accountancy corporations.
The swimsuit refers to FTX’s aggressive promoting, together with a multimillion greenback Tremendous Bowl advert starring Larry David, during which he rejected crypto earlier than viewers had been advised: ‘Do not be like Larry’
The plaintiff is known as as Julie Chon Papadakis, a resident of Puerto Rico, who deposited an unspecified quantity into an FTX account and has been unable to withdraw the funds.
The case says FTX achieved the ‘mass accumulation of funds from prospects’ by means of aggressive promotional campaigns. Attorneys accused the 2022 Superbowl industrial that includes Larry David for example of the techniques to woo prospects.
It additionally particulars the tweets by Bankman-Fried following the collapse of the agency, during which he admits: ‘I f***ed up.’
Attorneys from Kaplan Fox & Kilsheimer and Wites Legislation Agency filed the category motion and demanded a trial by jury. The estimate there are ‘multiple million members within the proposed Class’.
Armanino and Prager Metis had been approached for remark. Armanino has beforehand stood by its work for FTX.
