FTX Seeks $98.8 Million Recovery From Ex-Digital Markets Chief

FTX Trading Ltd. has sued one of Sam Bankman-Fried’s top lieutenants, Ryan Salame, for misappropriating as much as $98.8 million in fiat and cryptocurrency the fallen firm said he collected ahead of the exchange’s collapse.

Salame, the former FTX digital markets chief, aided and abetted breaches of fiduciary to FTX and its affiliates along with Bankman-Fried and some of his other top officers, FTX said in a suit filed Monday in the US Bankruptcy Court for the District of Delaware. Salame used funds transferred from FTX to buy luxury cars, a jet, and real estate, and to make political contributions, despite knowing the funds were commingled with money from customers and the corporation, FTX said.

FTX filed for Chapter 11 in November 2022 after the exchange collapsed, in what US prosecutors called one of the biggest financial frauds in American history. The bankruptcy court case against Salame is part of a likely years-long effort by FTX to recover funds for creditors.

Salame received $52.9 million in wire transfers and about $29.8 million in fiat and cryptocurrency exchange withdrawals from FTX during what’s called the preference period, which allows for the clawback of payments that occurred before a bankruptcy petition was filed, FTX said. Salame received the assets between November 2020 and November 2022 from FTX exchange accounts, FTX said.

FTX said Salame altogether misappropriated as much as $98.8 million after including additional alleged fraudulent transfers, which are designed to defraud creditors or made without receiving adequate value in return.

In May, Salame was sentenced to seven and a half years prison for his role in a campaign finance scheme and conspiracy to operate an unlicensed money transmitting business. He pleaded guilty to criminal charges in September 2023. He was the former chief executive of FTX’s Bahamas subsidiary and the first of Bankman-Fried’s close associates to be sentenced in the wake of the cryptocurrency exchange’s implosion.

In addition to the preference claims, FTX also said Salame should have to give back funds he earned in his role at FTX. He received at least $7.7 million in salary and bonus payments from FTX, and about 9 million of FTX’s own crypto tokens, called FTT; all while knowing that the token “was severely inflated by the perpetration and concealment of a fraud on FTX customers,” FTX said.

After selling his FTT for $24 million, he bought businesses, real estate, luxury cars, and a $2.3 million investment in RedBird Capital Partners Fund IV, FTX said.

FTX also asked the court to order the transfer of properties it said Salame bought using misappropriated funds, including those in Connecticut, Miami, Portugal, Hong Kong, and Bali, according to the filing.

Criminal attorneys for Salame didn’t immediately respond to a request for comment on Tuesday.

FTX Trading Ltd. is represented by Sullivan & Cromwell LLP and Landis Rath & Cobb LLP.

The case is FTX Trad. Ltd., Bankr. D. Del., No. 22-11068, suit 11/4/24.