Latest FTX allegations include plan to buy Nauru to survive cataclysm

Bankrupt FTX Trading ’s latest lawsuit against co-founder Sam Bankman-Fried and his former top executives have revealed new details about the allegations of massive fraud at the fallen crypto conglomerate.

According to the complaint, FTX Trading is seeking to claw back millions of dollars in cash and unwind over $US1 billion ($1.5 billion) in questionable transactions.

The lawsuit revealed Caroline Ellison, former co-chief executive officer at affiliated hedge fund Alameda Research, estimated a more than $US10 billion ($14.8 billion) cash deficit at FTX.com about eight months before the crypto exchange fell apart.

The document also claims that Bankman-Fried and former FTX chief technology officer Gary Wang took $US546 million ($811 million) from Alameda in May 2022 to acquire shares in Robinhood Markets.

The lawsuit said the FTX Foundation — FTX’s not-for-profit arm — pursued projects that were “frequently misguided and sometimes dystopian”. It alleged that a memo exchanged between a foundation officer and Bankman-Fried’s brother, Gabriel Bankman-Fried, laid out a plan to purchase the tiny island nation of Nauru and build a bunker there.

In the event that half or more of the global population died, the island would then be used to ensure the survival of members of the effective altruism movement — a philosophy that Sam Bankman-Fried publicly ascribed to. The memo noted that “probably there are other things it’s useful to do with a sovereign country, too,” according to the complaint.

Ellison gave herself a $US22.5 million ($33.4 million) bonus around the time in March 2022 when she estimated a more than $US10 billion cash shortfall at FTX.com, according to the lawsuit. Through a series of convoluted transfers, Ellison allegedly deposited the money from Alameda into her FTX account, with $US10 million of the funds making their way to her personal bank account.

She used the money for a $US10 million investment in an artificial intelligence company in her own name. On different occasions in 2021 and 2022, Ellison also allegedly misappropriated funds to give herself a multimillion-dollar bonus. The complaint noted that “no ‘bonus’ could possibly be justified given Ellison’s extensive misconduct.”