SINGAPORE: Singapore’s state investment firm Temasek, along with 17 other banks, venture capitalists and accounting firms, is being sued for allegedly conspiring with cryptocurrency exchange FTX to defraud investors.
Venture capital firms Sequoia Capital and SoftBank Vision Fund were also named in the lawsuit.
The 83-page class action lawsuit was filed in Miami, Florida on Wednesday (Feb 22) by Connor O’Keefe, an FTX customer whose funds have been frozen in his FTX account since the collapse of the cryptocurrency exchange.
The Mississippi resident claimed the 18 defendants knew about the alleged fraud occurring at FTX, but “did not care” because they had “money to make in the scheme”.
He had filed the lawsuit “on behalf of himself and all others similarly situated”, seeking compensatory and punitive damages for the defendants’ “knowing and substantial assistance in furtherance” of FTX founder Sam Bankman-Fried’s fraud.
The defendants had “wielded their power, influence, and deep pockets to launch FTX’s house of cards to its multi-billion dollar scale”, and “provided critical groundwork for the FTX fraud”, claimed the lawsuit.
According to the document, the due diligence checks that the defendants had conducted would have allowed them to acquire knowledge of FTX’s “omissions and untruthful conduct” and misappropriation of investor funds.
Each defendant also allegedly stood to gain financially from said misconduct despite this knowledge, and “agreed, at least impliedly, to assist that unlawful conduct”, it claimed.
The lawsuit also stated that the defendants had “full view” that Sam Bankman-Fried was misappropriating their deposits on “vice, vanity, and speculative personal investments”.
“Through diligence on FTX and close ties with (Sam Bankman-Fried), Defendants learned that FTX was operated as (Sam Bankman-Fried)’s personal piggy bank, that as quickly as FTX customer funds flowed into FTX, they flowed back out to other entities (Sam Bankman-Fried) separately owned or controlled, and that FTX lacked the most basic internal controls, such that the enterprise was in fact a house of cards,” alleged the lawsuit.
“But Defendants did not care. They, too, had money to make in the scheme, and their interests aligned with (Sam Bankman-Fried)’s.”
In response to CNA’s query, Temasek Holdings said: “As this is an ongoing legal matter, we decline to comment.”