Class action lawsuits hit FTX
2022.12.28 13:13
Class action lawsuits hit FTX
Budrigannews.com – The group of former customers made an effort to get their money back first while the government agencies waited in line to sue the FTX and Sam Bankman-Fried, the company’s founder. Customers, not investors, should have priority access to the company’s frozen funds, according to a class action lawsuit filed by four individuals.
The lawsuit was filed on December 27 in the District of Delaware Bankruptcy Court of the United States. Four plaintiffs assert that they represent the entire class of former FTX customers, which could number up to one million. Priority rights to return digital assets held by FTX US or FTX.com to its customers are the goal of the lawsuit.
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The plaintiffs emphasize that the FTX User Agreement forbade the platform from borrowing or using customer funds for its own purposes, such as operating expenses. According to the complaint, any attempt to remove customer funds from accounts was an “impermissible co-mingling, misappropriation, misuse, or conversion of customer property.”
According to the lawsuits, funds that have been frozen by FTX and can be traced as customer property cannot be used to pay for expenses, claims, or creditors of non-customers until they are repaid by customers:
“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 disappearance of approximately $372 million in digital assets from FTX has recently been the subject of an investigation by the Department of Justice. During its bankruptcy and internal collapse on November 12, FTX issued a warning to its customers about unusual wallet activity involving at least 228,523 ETH that had been transferred out of the exchange by an unknown individual.
When the cryptocurrency wallets of the now-bankrupt trading firm Alameda Research, the sister company of FTX, began transferring funds just days after SBF was released on a $250 million bond, it raised suspicions of additional wrongdoing.
