FTX customers file a class action lawsuit demanding dwindling assets of the company
Beijing, December 28 (Xinhua)-- FTX customers reportedly filed a class action lawsuit against the failed cryptocurrency exchange and its former executives, including Sam Bankman-Sam Bankman-Fried, on Tuesday local time, demanding that the company's digital assets belong to customers.
The lawsuit is the latest legal effort by clients to file claims for dwindling assets of FTX, which has had legal disputes with liquidators in the Bahamas and Antigua, as well as with the bankruptcy property of Blockfi, another bankrupt cryptocurrency company.
According to the lawsuit filed with the U.S. Bankruptcy Court in Delaware, FTX promised to isolate customer accounts, but allowed them to be misappropriated, so customers should receive asset repayment first.
"members of the customer base should not queue with secured or generally unsecured creditors in these bankruptcy proceedings to share the dwindling assets of the FTX Group and Alameda," the plaintiff said in the indictment.
FTX did not immediately respond to a request for comment.
FTX, based in the Bahamas, stopped withdrawals last month and filed for bankruptcy as clients rushed to withdraw their assets from what was once the world's second-largest cryptocurrency exchange after questions about its financial situation surfaced.
The charges facing Mr Bankman-Fred stem from what a federal prosecutor called "epic fraud", including the alleged use of client money to support his Alameda Research cryptocurrency trading platform.
Bankman-Fred admitted that there was a mistake in FTX's risk management, but said he did not think he should be held criminally responsible. He has not pleaded guilty and was released on $250 million bail last week, after which his travel was restricted.
The latest class action lawsuit seeks to seek a court declaration that traceable client assets are not FTX property on behalf of more than 1 million FTX customers in the United States and abroad. According to the complaint, the client group also wants the court to specifically determine that the traceable client property held in Alameda is not Alameda assets.
If the court determines that these assets are FTX property, then the customer will demand a ruling that they have priority over other creditors.
Cryptocurrency companies are less regulated and their registered addresses are usually located outside the United States, and deposits are not guaranteed like those of American banks and brokers, complicating the question of whether companies or customers own these deposits.
