FTX Customers Slap Failed Crypto Exchange With Class Action Lawsuit
This photo illustration shows the logo of cryptocurrency FTX, reflected in its website on a laptop screen in Washington, DC, on November 13, 2022.
Crypto-empire FTX filed for bankruptcy on November 11, with its CEO Sam Bankman-Fried stepping down and fleeing for the Bahamas. The company’s founder was arrested on December 12 at the request of US authorities, charged with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering.Customers of the now-collapsed Bahamas-based cryptocurrency exchange FTX have filed a Class Action Lawsuit against it and its former top executives, seeking to recover their funds.As creditors and liquidators close in on the rapidly dwindling assets of Sam Bankman-Fried’s company, which filed for bankruptcy on November 11, 2022, customers are hoping for a ruling that would declare them entitled to repayment before others. According to the lawsuit, which seeks to represent over one million FTX customers from the US and other countries, the company had committed to segregating customer accounts to save them from being misappropriated amid the scandal.
"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 complaint, filed in the US Bankruptcy Court, Delaware, stated.
AmericasEx-FTX Boss, Other Executives Received ‘Billions of Dollars in Loans’, Former Hedge Fund CEO Says24 December, 05:27 GMTThe filing reveals that customers want a court order to declare traceable customer assets not FTX property; property traceable to customers held at FTX’s “sister” cryptocurrency exchange, Alameda, declared not Alameda property. Alameda, co-founded in September 2017 by Sam Bankman-Fried and crypto trader Tara Mac Aulay, filed for bankruptcy alongside FTX.According to a complaint filed earlier by the Commodity Futures Trading Commission (CFTC), most of the lost customer deposits of FTX were funneled to cover debts for Alameda Research.Similarly, the new Class Action filed in Delaware is seeking a court declaration that funds held in FTX US accounts for US customers and in FTX Trading accounts for customers outside the United States, or other traceable customer assets, are not FTX property.In the event that a court ruling states that the customer funds in question belong to FTX, then they insist on a declaration saying they are entitled to first dibs on repayment before other creditors.
Opinion & AnalysisFTX Scandal is Tip of Iceberg: How Corruption Flourishes on the Hill & in Executive Residence3 December, 09:59 GMTFTX and over a hundred of its affiliates filed for bankruptcy in Delaware on November 11, 2022, with founder and CEO Sam Bankman-Fried arrested in the Bahamas, where he fled after stepping down on December 12. Extradited at the request of US authorities, he is accused of fraud and money laundering.John Ray III, the new CEO of FTX, who specializes in recovering funds from failed corporations, admitted in court documents on November 17: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” The former FTX CEO allegedly transferred $8 billion of FTX customer funds to his trading company, Alameda Research. Also, according to Internet activists, $500 million disappeared from the accounts of FTX under “suspicious circumstances.”Sam Bankman-Fried has since been released on $250 million bail, and is to live in Palo Alto, California with his parents under electronic surveillance. The next hearing is scheduled for January 3, when he will enter his plea and be arraigned.
AmericasFTX Founder to Live With His Parents After Being Released on Enormous Bail23 December, 06:56 GMT
