• A group of FTX customers are suing the insolvent cryptocurrency exchange in order to become the first to recover funds from the failed company in the bankruptcy case in Delaware.
• The lawsuit seeks a court ruling recognizing that their holdings with the trading platform belong to them rather than the failed company.
• Four FTX customers have filed a lawsuit against the crypto exchange and its former executives, including founder and ex-CEO Sam Bankman-Fried, to declare that the digital assets held with the platform belong to its customers rather than FTX or its other creditors.
A group of customers have filed a lawsuit against the insolvent cryptocurrency exchange FTX in an attempt to recover the funds they are owed. The lawsuit, filed as part of the bankruptcy case in Delaware, seeks a court ruling recognizing that their holdings with the trading platform belong to them rather than the failed company.
Four FTX customers have filed the complaint against the crypto exchange and its former executives, including founder and ex-CEO Sam Bankman-Fried (SBF). They want the court to declare that the digital assets held with the platform belong to its customers rather than FTX or its other creditors.
The Bahamas-based FTX filed for Chapter 11 bankruptcy protection in the state on Nov. 11 as traders and investors rushed to withdraw their money. Amid a number of legal efforts to lay claim to the assets of FTX, its new management pledged that customers will be repaid first. The latest complaint insists that „customer class members should not have to stand in line along with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished estate assets of the FTX Group and Alameda.“
The lawsuit seeks to give customers priority right to repayment over other creditors, which could be a major breakthrough for those seeking to recover their funds. The customers argue that their digital assets should be treated as a priority in the bankruptcy proceedings, as their property rights have been violated.
The lawsuit also comes in the wake of Bankman-Fried’s extradition from the Bahamas and his facing charges in the U.S. related to a „fraud of epic proportions,“ as a federal prosecutor put it. Among them, an allegation that customer deposits, in both fiat and crypto, were used to support his crypto trading platform Alameda Research.
The legal battle between FTX’s customers and its management is ongoing, with the outcome of the lawsuit yet to be determined. Those filing the lawsuit hope to be the first to recover their funds, but the outcome will ultimately depend on the court’s decision. Regardless, it is clear that the customers of FTX have been wronged, and they are now fighting to recover their funds and secure justice.