FTX customers filed a class action lawsuit against the failed exchange and its former top executives, including Sam Bankman- Fried, on Tuesday, seeking a declaration that the company's holdings of digital assets belong to customers.
The lawsuit is a attempt to claim FTX's assets, which is already feuding with liquidators in the Bahamas and Antigua and the bankruptcy of Blockfi, another failed criptocurrency company.
According to the lawsuit filed in the U.S. Bankruptcy Court in Delaware, FTX pledged to segregate customer accounts and allow them to be misappropriated.
Customer class members should not have to stand in line with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished assets of the FTX GroupFTX Group and Alameda, said the complaint.
FTX halted its withdrawals last month and filed for bankruptcy after customers tried to withdraw their holdings from the second largest criptocurrency exchange after questions surfaced about its finances.
Sam Bankman- Fried faces federal charges stemming from a fraud of epic proportions that included allegedly using customer funds to support his Alameda Research trading platform.
Sam Bankman- Fried has acknowledged risk-management failures at FTX, but he does not believe he has criminal liability. He has not yet entered a plea and was released on a $250 million bond last week that included restrictions on his travel.
The proposed class, which is intended to represent more than 1 million FTX customers in the United States and abroad, seeks a declaration that customer assets are not FTX property. The customer class wants the court to find that the property held in Alameda that is traceable to customers is not Alameda property, according to the complaint.
The lawsuit seeks a declaration from the court that funds held in FTX U.S. accounts for U.S. customers and FTX Trading accounts for non-U. S. customers or other traceable customer assets are not FTX property. The customer class wants the court to find out that the property held at Alameda that is traceable to customers is not Alameda property, according to the complaint.
If the court decides that it is FTX property, the customers will seek a ruling that they have a priority over other creditors.
Deposits aren't guaranteed as U.S. bank and brokerage deposits are not guaranteed, complicating the question of whether the company or customers own the deposits.