Funviralpark Dec 27 (Reuters) – FTX customers filed a class action lawsuit Tuesday against the bankrupt cryptocurrency exchange and its former chief executive, including Sam Bankman-Fried, alleging that the company’s digital assets I asked for a declaration that it belonged to the customer.
The lawsuit is the latest legal effort to claim FTX’s dwindling assets, which are already in dispute with liquidators in the Bahamas and Antigua, and the bankruptcy estate of another failed crypto firm, Blockfi.
According to a lawsuit filed in the U.S. Bankruptcy Court in Delaware, FTX promised to segregate customer accounts and instead allowed them to be embezzled, so it must pay customers back first.
“Customer class members are not required to stand alongside secured or general unsecured creditors in these bankruptcy proceedings just to share the reduced real estate assets of FTX Group and Alameda.
FTX did not immediately respond to a request for comment.
Bahamas-based FTX suspended withdrawals and filed for bankruptcy last month after rushing to exit what was once the second-largest cryptocurrency exchange after questions surfaced about its finances.
Bankman-Fried faces indictments stemming from what federal prosecutors called “epic rates of fraud,” including allegations of using customer funds to support Alameda Research’s crypto trading platform .
Bankman-Fried admitted to failing to manage risk at FTX, but said he believed he did not face criminal charges. He has yet to file a petition, and last week he was released on a $250 million bond, which includes restrictions on his travels.
The proposed class wishes to represent more than one million FTX customers in the United States and abroad, and seeks a declaration that traceable customer assets are not FTX assets. According to the complaint, the customer class also wants the court to determine unequivocally that property held by Alameda that can trace customers is not Alameda’s property.
The lawsuit seeks the court to declare that funds held in FTX US accounts for U.S. customers and FTX Trading accounts or other traceable customer assets for non-U.S. customers are not the property of FTX. I’m here. According to the complaint, the customer class also wants the court to determine unequivocally that property held by Alameda that can trace customers is not Alameda’s property.
If the court finds it to be FTX’s property, the customer seeks a ruling that it has priority over other creditors.
The issue of whether the company or the customer owns the deposits, as cryptocurrency companies are loosely regulated, often based outside the United States, and deposits are not insured like US bank or brokerage deposits is getting complicated.
Reported by Tom Hals of Wilmington, Delaware.Edited by Sam Holmes
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