Wednesday, December 6, 2023

FTX Customers File a Class-Action Lawsuit in Order to Recover Money

  • Customers of FTX filed a class action lawsuit against the company Tuesday to recover their money. 
  • The complaint stated that customers have priority rights to repayment over other creditors. 
  • Former top executives Caroline Ellison, Sam Bankman Fried, and Sam Bankman Fried are named in the lawsuit.

Customers of FTX filed a class action lawsuit Tuesday against the bankrupt crypto lending company and its former CEO Sam Bankman Fried to recover money they lost earlier in the year.

Four plaintiffs filed the class action on behalf of millions former FTX customers. They claimed that digital assets of the firm belonged to customers and that they should have priority access to them, according to the lawsuit filed in Delaware’s US Bankruptcy Court.

The complaint stated that “Customer Class members shouldn’t have to stand in line with secured or general unsecured creditors in these Bankruptcy Proceedings just for a share in the diminished estate assets FTX Group, and Alameda.” 

“Cash and assets traceable customers, which never belonged FTX or Alameda and don’t belong to the estates, should only be earmarked for customers. Victimized customers should have priority over any other cash possessed, recovered, or seized by Debtors.”

Insider reached out to the plaintiffs’ lawyers but they did not respond immediately outside of normal business hours.  

FTX, 130 other affiliated companies filed for Chapter 11 bankruptcyAfter it was revealed that Bankman-Fried had been involved in the November freeze on customer withdrawals, transferred billions of dollarsAlameda will be supported by funds from customers 

Bankman-Fried and his circle reportedly spent lavishly on homes and other purchasesYou can use these funds. 

The class-action seeks a declaration from the company that FTX assets traceable by customers are not its property and that Alameda asset traceable to customers should be considered Alameda property. 

The complaint stated that if FTX’s assets are found to be in the possession of the court, customers should have priority rights over investors to recover their money. 

The lawsuit also named Caroline Ellison, Nishad Sing, Zixiao Wang and Nishad Sing as defendants. 

Ellison, former CEO of Alameda pleaded guilty to seven chargesDecember 22, 2013, including conspiracy to commit wirefraud, securities fraud and commodities fraud. 

Bankman-Fried hit with eight criminal chargesHe was also charged with money laundering and fraud in December, shortly after his arrest. He was released from custodyHe is being held on $250m bail and must remain with his parents for his trial.

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