• Four plaintiffs have filed a class action lawsuit against FTX in the U.S. Bankruptcy Court for the District of Delaware, demanding priority access to frozen funds of the company for its customers.
• The lawsuit emphasizes that the FTX User Agreement did not permit the platform to use customer funds for its own purposes, including borrowing or using it for operating expenses.
• The plaintiffs claim that customers should not have to stand in line with secured or general unsecured creditors to share in the diminished estate assets of the FTX Group and Alameda.
Four plaintiffs have recently taken legal action against the now-defunct crypto platform FTX, filing a class-action lawsuit in the United States Bankruptcy Court for the District of Delaware. The lawsuit seeks priority access to the company’s frozen funds for former customers, as opposed to creditors or investors. The four claimants are representing a class of potentially up to one million individuals.
The complaint notes that the FTX User Agreement did not permit the platform to use customer funds for its own purposes, including borrowing or using it for operating expenses. According to the lawsuit, any removal of customer funds from accounts was an “impermissible co-mingling, misappropriation, misuse, or conversion of customer property.” The plaintiffs are arguing that customer funds should not be used to pay for non-customer expenses, claims, or creditors until customers are repaid.
The complaint states that 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 plaintiffs are demanding priority access to the frozen funds of the company for its customers.
The case comes as government agencies are queuing to sue the FTX and its founder Sam Bankman-Fried. The lawsuit is part of an effort to ensure that customers are able to get their money back first. The case is expected to move forward in the coming weeks and could have far-reaching implications for the cryptocurrency industry as a whole.