FTX Costumers File Class-Action Lawsuit To Get Priority Restitution
The creditors of a bankrupt cryptocurrency platform do not want to wait in line with the customer class members.
The group of former clients made an effort to get their money back before the government agencies lined up to suit the FTX and its founder Sam Bankman-Fried. In a class action lawsuit filed by four people, the company’s customers—not investors—are given priority access to its frozen cash.
In the United States Bankruptcy Court for the District of Delaware, the lawsuit was submitted on December 27. There could be up to 1 million former FTX customers in the class that four plaintiffs claim to represent. The priority rights to return digital assets held by FTX US or FTX.com to its clients are what the action seeks to recoup.
The plaintiffs stress that the FTX User Agreement did not authorize the platform to borrow money from customers or use consumer funds for running costs. The complaint states that any withdrawal of money from client accounts constitutes “unlawful co-mingling, misappropriation, misuse, or conversion of customer property.”
Therefore, until consumers are paid back, any funds frozen by FTX and traceable as customer property cannot be used to pay non-customer expenses, claims, or creditors
“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.”
A recent inquiry into the whereabouts of nearly $372 million in lost digital assets from FTX has been opened by the Department of Justice. FTX alerted consumers to unusual wallet activity on Nov. 12 in the midst of its bankruptcy and internal breakdown about at least 228,523 Ether transferred out of the exchange from an unidentified offender.
Just days after SBF was released on a $250 million bond, money started to flow out of the cryptocurrency wallets connected to the now-bankrupt trading firm Alameda Research, the sister business of FTX, raising suspicions of additional foul activity.
