Former users of Bahamas-based cryptocurrency network FTX filed a class-action lawsuit against the failed cryptocurrency exchange and its executives, including Sam Bankman-Fried, on Tuesday, demanding that the company’s holdings of digital assets become the property of customers.
According to the lawsuit filed in the US Bankruptcy Court, FTX has not fulfilled its previous obligations and is therefore obligated to ensure that its clients get their money back without delay.
“Members of the customer group should not line up with the creditors in order to see something of the company’s assets.The complaint states.
The crypto platform halted payments early last month and filed for bankruptcy protection on November 11 after the company’s valuation plummeted from $32 billion to near zero in a matter of days, with its founder and CEO Sam Bankman Fried’s net worth of $16 billion. Also. Launched by Bankman-Fried, FTX became one of the largest cryptocurrency exchanges in the world three years ago.
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Bankman-Fried, who was arrested and released on a whopping $250 million bail, faces serious charges. In what federal prosecutors called “fraud of unfathomable proportions,” customer funds were allegedly used to support cryptocurrency trading platform Alameda Research.
According to the 13-page indictment issued by New York prosecutors, Bankman-Fried knowingly misled clients and investors to benefit herself and others while playing a central role in the collapse of the multibillion-dollar company. The founder of the company is accused of eight crimes, from bank transfer fraud to money laundering to fraud committed in a criminal organization.
According to the indictment, the founder created a business model that allowed him to siphon investors’ money and funnel it into his hedge fund, Alameda Research, which then used the money to make questionable real estate purchases and large political donations.
Bankman-Fried acknowledged FTX’s mistakes in risk management, but said he did not believe it was criminally responsible.
Said group, which seeks to represent more than 1 million FTX clients, is seeking acknowledgment that the clients’ remaining assets are not owned by FTX. They also want the court to declare that the assets held in Alameda do not belong to the platform. If the court decides that this matter is for FTX, then in that case the clients are asking to have a priority right of payment over the other creditors.
