FTX is trying to recover $90 million from Waves founder Aleksandr “Sasha” Ivanov. They accuse him of blackmail and fraud during their bankruptcy proceedings.

The complaint, filed on November 10, claims Ivanov fraudulently took around $530 million from Vires Finance. This includes $90 million linked to Alameda Research, a hedge fund associated with FTX.

According to the complaint, Ivanov pressured Alameda to support Vires and Waves. He threatened to freeze their assets on Vires if they didn’t comply. Ivanov hasn’t responded to requests for comment.

This legal action is part of a larger effort by FTX to reclaim funds from various parties. They are also targeting major players like Binance and investor Anthony Scaramucci. The outcome will significantly affect how much money FTX can return to users who lost funds during its 2022 bankruptcy.

Ivanov faces other claims as well. In July, convicted crypto trader Avraham Eisenberg accused him of stealing $14 million on the Waves blockchain in 2022. Eisenberg’s claims are similar to those made by FTX, alleging that Ivanov used a similar scheme to misappropriate $530 million from Vires Finance users.

The complaint details that Ivanov’s alleged fraud occurred between January and March 2022. He reportedly exploited USDN, a stablecoin on the Waves blockchain. Ivanov used wallets linked to him to borrow more reputable stablecoins that users deposited into Vires Finance.

He then exchanged these for WAVES tokens, pushing up the asset's price. This process continued until all available stablecoins were borrowed. When users raised concerns, the price of WAVES began to drop, causing USDN to lose its dollar peg. This maneuver left Vires Finance users with unbacked USDN instead of their dollar-backed USDC and USDT, costing them millions.

On April 3, 2022, Ivanov publicly blamed Alameda for manipulating WAVES prices and causing panic selling. However, he was negotiating with Alameda behind the scenes at the same time.

According to the complaint, Waves proposed a deal to Alameda to resolve the situation. They suggested that FTX list USDN and facilitate the return of borrowed WAVES in exchange for stablecoins. Over the next months, various proposals were exchanged, but an agreement was never reached. Ivanov insisted that Alameda publicly endorse Waves and Vires Finance.

Ivanov believed that if FTX supported Waves, it would restore confidence in the ecosystem after the theft. One trader from Alameda expressed discomfort with the proposal, saying it felt like blackmail. Caroline Ellison, then co-CEO of Alameda Research, voiced her distrust of Waves, stating that giving in to blackmail seemed wrong.

After FTX and Alameda declared bankruptcy in November 2022, the exchange's liquidators tried again to get Ivanov to return the $90 million. After an initial call in January 2023, Ivanov stopped responding.

In April 2023, Ivanov threatened investors who lost money in the Vires Finance incident. He later claimed that Waves Labs, a firm behind the blockchain, suffered significant financial losses due to a prolonged hack. In June, Ivanov dissolved Numeris, the legal entity managing Vires, and in November, he dissolved DLTech, the entity overseeing Waves.

As for USDN, the stablecoin that Vires Finance users are left with, it currently trades for about $0.01.