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As more details begin to come out from the Sam Bankman-Fried crypto empire, it appears that the big investors are preparing to slap a lawsuit. According to reports, the venture capitalists who invested heavily in FTX are planning to sue the FTX founder on charges of fraud. While the company announced bankruptcy proceedings, legal pressure from investors would only worsen things at the troubled crypto exchange. The VCs are aiming at recovering their investments from the company.
Sam Bankman-Fried Lawsuit From VCs
As per a report from The Information, venture capitalists who account for billions of dollars of investment in FTX are discussing plans about potential lawsuit. The lawsuit would be aimed at recovering money to offset what shareholders would have lost, the report said. The move comes after the company had last week decided to go for voluntary chapter 11 bankruptcy. FTX.com, Alameda Research and around 130 additional affiliated companies came under the chapter 11 bankruptcy proceedings.
The FTX fallout intensified regulatory action on crypto entities, which were already subject to intense scrutiny. In a latest, the White House authorities said they were closely watching the situation along with relevant regulators. Meanwhile, FTX’s liquidity crisis had a direct impact on other crypto exchanges it had stake in. On Monday, Japanese crypto exchange Liquid halted withdrawals due to FTX’s bankruptcy related issues.
What Next For SBF?
The bankruptcy announcement also involved the stepping down of Sam Bankman-Fried from the role of chief executive officer. John J. Ray III was appointed as the new FTX CEO. However, he said he would be working to monetize assets for the benefit of stakeholders. Despite the fund crisis, SBF is reportedly keeping efforts on to raise capital to the tune of $8 billion. The FTX founder along with few employees reached out to venture capitalists in search of capital. He had informed investors that he needs emergency funding to fill an $8 billion deficit.
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