FTX has taken legal action against its former CEO, Sam Bankman-Fried, and several other former key executives from the now-bankrupt crypto exchange.

The lawsuit aims to recover more than $1 billion in allegedly misappropriated funds, accusing the defendants of breaching their fiduciary duties and engaging in financial fraud.

In a complaint filed on July 20 in a United States Bankruptcy Court, FTX named several former executives, including former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, former FTX engineering director Nishad Singh, and Sam Bankman-Fried as defendants.

The lawsuit alleges that these former executives misappropriated customer funds to finance personal projects, luxury condominiums, speculative investments, and political and “charitable” contributions. FTX claims this breach of fiduciary duty constitutes one of the largest financial frauds in history.

The lawsuit also asserts that the defendants created an environment where a select few employees had excessive power to oversee transfers of fiat and crypto assets.

Furthermore, they granted themselves the authority to hire and fire employees without effective oversight on how they exercised these powers.

FTX further alleges that the former executives issued equity worth over $725 million to themselves without providing any value in return to the debtors.

FTX also accuses Bankman-Fried and Wang of misappropriating an additional $546 million to purchase shares in the trading platform Robinhood.

The lawsuit claims that Ellison paid herself $28.8 million in bonuses and used $10 million of the funds to acquire a stake in an artificial intelligence company.

Moreover, the filing alleges that on Jan 24, 2022, Bankman-Fried transferred $10 million as a “gift” from his FTX US account to his father’s account on the same exchange.

Subsequently, Bankman-Fried’s father made several transfers totaling $6.75 million to his personal accounts at Morgan Stanley and TD Ameritrade. FTX contends that this “gift” is being used to fund Bankman-Fried’s legal defense.

Furthermore, the filing reveals that many of the alleged fraudulent transfers took place while the exchange was insolvent, something the defendants were well aware of.

Initially prohibiting accounts with negative balances, Bankman-Fried reportedly directed associates to modify the exchange’s code to maintain a negative balance in Alameda’s account.

Following the legal turmoil and financial mismanagement, FTX and its subsidiaries are now under the leadership of restructuring chief and CEO John Ray. The crypto exchange filed for Chapter 11 bankruptcy on Nov. 11, 2022.