“Secret Account” Scandal: Why FTX Wants $53M From Upbit
US crypto alternate FTX has filed a lawsuit towards Dunamu, the operator of South Korea’s largest alternate Upbit, to get well greater than $53 million in property.
The lawsuit, part of the continued FTX chapter proceedings, was filed by FTX’s subsidiary Alameda Research on November 5, 2024, with the US Bankruptcy Court for the District of Delaware. The case continues to be pending.
Why Is FTX Suing Dunamu?
The lawsuit filed by FTX towards Dunamu is a “criticism for the return of property and violation of computerized keep.” The core of the declare is that Dunamu, by means of its Upbit alternate, is holding FTX’s property and may return them.
According to Alameda Research, the corporate opened digital asset storage accounts on crypto exchanges worldwide. It opened these accounts not solely in its personal identify but additionally beneath worker names or shell firms. The objective was to create a sort of secret nominee account.
Unraveling a “Secret Account”
Alameda claims that somebody opened certainly one of these secret accounts on Upbit beneath Yang Jai Sung’s identify, and an e mail deal with, seoyuncharles88@gmail.com.
FTX alleges the account was a secret Alameda account. This relies on an inner messenger dialog from March 2022, the place an Alameda worker stated, “Upbit authentication is full.” The agency additionally famous that the seoyuncharles88 e mail deal with routinely forwarded to an Alameda deal with.
Additionally, FTX claims that Yang Jai Sung is the daddy of Charles Yang, the pinnacle dealer for Genesis Block. This is an Alameda affiliate, and the declare relies on a lawsuit between FTX and Genesis Block.
FTX entered chapter proceedings in November 2022 after revelations of buyer fund misuse and accounting irregularities. Misusing buyer funds by means of its affiliate, Alameda, was a big level of rivalry. As a end result, founder Sam Bankman-Fried (SBF) was sentenced to 25 years in jail in March 2024.
FTX claims it requested the return of the property from Dunamu a number of instances, however Dunamu has not complied and not using a legitimate purpose. FTX made the primary request on November 16, 2022, and a second one in January 2023, however acquired no response.
The Case Heats Up
According to the criticism, Dunamu responded in July 2023, saying it couldn’t even affirm the Alameda Research account existed. It demanded proof that Alameda Research really managed the account.
Although Alameda Research offered documentation, Dunamu notified them that the “submitted supplies have been inadequate.” The firm wouldn’t proceed and not using a doc proving a contract between Alameda and Yang Jai Sung.
FTX defined that SBF’s legal trial testimony included an announcement that an “$8 billion debt was hidden by means of the seoyuncharles88 account.”
FTX additionally connected an affidavit from former Alameda Research CEO Caroline Ellison. In the affidavit, she acknowledged that “one of many Alameda accounts was an Upbit account registered utilizing the seoyuncharles88 e mail, and Alameda managed, used, and funded this account.”
A Dunamu consultant advised BeInCrypto that “the questioned account is at present frozen attributable to anti-money laundering points,” including, “Dunamu is within the function of safekeeping the frozen digital property.”
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