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“Aggrieved” FTX Customers Seeks $8 Billion in Seized Assets
A group of FTX Clients say $8 billion of the company’s seized assets rightfully belong to them.
As Coindesk reported on Tuesday (June 17), these customers are seeking a judgment declaring asset forfeiture do not belong to the bankruptcy estate of the failed cryptocurrency exchange.
This latest legal action comes weeks after the company unveiled a reorganization plan that would give 98% of its creditors 118% of their requests — in cash — within 60 days of court approval.
“FTX achieved this level of recovery by monetizing an extraordinarily diverse collection of assets, the majority of which were proprietary investments held by Alameda or FTX Ventures businesses, or lawsuits,” the company said last month.
Alameda refers to Alameda Research, FTX’s sister company at the center of the exchange collapse in the fall of 2022.
However, the bankruptcy plan has upset many FTX clients, who say they missed the opportunity to benefit from the recent cryptocurrency rally when their funds were tied up in the bankruptcy case.
Coindesk, citing court documents, says the plaintiffs allege that FTX filed for bankruptcy during the so-called cryptocurrency winter, when cryptocurrency prices saw a dramatic decline.
The victims’ attorneys, Adam Moskowitz and David Boies, said in the bankruptcy filing that the bankruptcy process has left “FTX’s customers feeling ‘offended and ripped off,’ many of whom view the bankruptcy process as a second act of theft’ and that ‘FTX the bankruptcy estate remains the same fraudulent corporate entity as the business managed by SBF.’
“SBF” is former FTX CEO Sam Bankman-Fried, who was convicted and sentenced to 25 years in prison for fraud related to the exchange’s collapse. He is appealing the sentence.
“If not for the crimes for which SBF was convicted, namely the theft and misuse of client assets, clients would have owned their cryptocurrency investments today,” the statement read.
The statement also claims that the bankruptcy code requires giving priority to some creditors over others, with holders of FTX’s FTT token at the bottom of the list.
“Holders of that token are unlikely to receive compensation from the estate,” he said.
“We don’t know what the damages will be because there hasn’t been a full accounting done,” Moskowitz told CoinDesk, noting that “it’s safe to say over $8 billion” in damages is owed.