FTX customers have filed a lawsuit against the failed cryptocurrency exchange and its former top executives, including founder Sam Bankman-Fried, to claim assets amid bankruptcy woes and regulatory turmoil.
The class-action lawsuit seeks declaration that FTX’s holdings of digital assets belong to the customers. FTX, which was once the second largest cryptocurrency platform in the world, witnessed a historic crash in October. The collapse came about following revelations that the customer accounts FTX had pledged to keep segregated were being misappropriated by its sister company, Alameda.
The revelations triggered chaos in the world of digital assets as investors scrambled to withdraw holdings in huge numbers, which led to FTX’s spiral into bankruptcy. The value of Bitcoin dropped to $16,000 from $20,000 following the crash.
“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,” the complaint says.
The founder, Sam Bankman-Fried, was subsequently arrested and has since been embroiled in a high-profile legal battle with US prosecutors. Last week, he was released on a $250 million bond to his parents with restrictions placed on his travel. Bankman-Fried’s failure has been called a “fraud of epic proportions”.
The crash had a profound impact on Pakistani investors as well, with losses ranging from Rs50,000 to Rs3 million. To know more about how FTX’s collapse affected Pakistani investors, read, The FTX crash and its impact on Pakistani investors.
