Former customers of FTX.com have filed a class action lawsuit against the bankrupt cryptocurrency exchange and its top executives, including Sam Bankman-Fried, to seek priority rights to repayment before any non-customer creditors.
See related article: Sam Bankman-Fried, FTX misled investors, lent billions to Alameda, Caroline Ellison says
Fast facts
- Four plaintiffs alleged in a lawsuit filed on Tuesday to the U.S. Bankruptcy Court for the District of Delaware that a “closely-knit group” of FTX executives “totally abdicated or ignored their duty to put in place adequate controls to protect” customer assets.
- “Whether caused by arrogance, ambition, avarice or vainglory, the FTX Executive Defendants failed to institute any corporate controls and were therefore able to cause, direct or allow the misappropriation of billions of dollars in customer funds and digital assets deposited or held worldwide at FTX,” the plaintiffs alleged.
- According to the exchange’s Nov. 19 bankruptcy filings, FTX Trading Ltd. and its affiliates owe their 50 largest creditors about US$3.1 billion.
- Separately, the U.S. Department of Justice has launched a criminal probe into the US$372 million stolen from FTX soon after it filed for bankruptcy, and has managed to freeze a fraction of it, according to Bloomberg.
- The fall of FTX, once the second-largest crypto exchange in the world, has affected several businesses and has contributed to sweeping job cuts in the industry.
- See related article: What the FTX collapse means for the future of crypto
