February 4, 2023

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More trouble for FTX: Clients go to class action against the struggling company

On Tuesday, a number of former clients of bankrupt crypto firm FTX sued the company and its former bosses, including founder Sam Bankman-Fried, in hopes of securing the remainder of the company’s digital assets. Reuters reports.

The lawsuit is the latest in a series of attempts to extract what’s left of the company, writes the news outlet and notes that FTX is arguing with both bankrupt Blockfi and creditors in the Bahamas and Antigua.

In other words, it’s another blow to the company and its founder in what many refer to as one of the biggest bankruptcy scandals of all time.

– Not having to queue all together

According to the lawsuit, which was filed in Delaware bankruptcy court, the clients believed that FTX was supposed to separate clients’ accounts, which the company did not do, but instead allowed “account misuse.”

– Customers do not have to line up with secured or unsecured creditors in these bankruptcy proceedings – only to participate in FTX Group and Alameda’s discounted real estate assets, says the lawsuit reproduced by Reuters.

The US Commodity Futures Trading Commission (CFTC) estimates that $8 billion worth of funds were misused from FTX clients’ accounts.

FTX collapsed in November and hundreds of millions of dollars disappeared. It is currently unclear where the deposits have gone.

“epic proportions”

FTX filed for bankruptcy protection in the US in November, and Bankman-Fried has stepped down as director of the company. Earlier in December, he was arrested in the Bahamas and extradited to the United States shortly thereafter. He was later released on bail of approximately $2.5 billion.

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The charges against Bankman Friedhan include, among others, fraud and money laundering of what the prosecution described as “epic proportions.”

If the 30-year-old is convicted on all eight counts, the total sentence could be more than 100 years in prison.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For additional terms look here.