FTX Customers File Class Action Against Bankrupt Crypto Exchange

FTX customers had filed a class action against the bankrupt crypto exchange and its ex-CEO Sam Bankman-Fried to recover funds they lost when the business collapsed earlier this year.

Four plaintiffs filed a class action on behalf of millions of former FTX clients, claiming that customers own the company’s digital assets and should be given full rights to access those funds.

“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 said.  “Cash and assets traceable to customers, which never belonged to FTX or Alameda, and do not belong to the estates, should be earmarked solely for customers, and victimized customers should likewise have priority to any other cash possessed or recovered by Debtors.”

Following the finding that Bankman-Fried had transferred billions of dollars of client funds to back Alameda, FTX and 130 related companies filed for Chapter 11 bankruptcy and suspended client withdrawals in November.

These funds were reportedly spent by Bankman-Fried and his close friends on houses and other purchases.

The class action lawsuit urges the court to rule that neither the Alameda properties nor the FTX assets associated with consumers should be considered Alameda property.

“If the court finds that the assets remain FTX’s property, then customers should have priority rights to repayment and/or recovery over other creditors,” the complaint said. 

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