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FTX Users Sue for Priority Repayment and Damages in Bankruptcy Proceedings
The class-action lawsuit accuses the bankrupt crypto exchange's executives of intentionally misappropriating customer funds to fund risky strategies and their lavish lifestyles.
Updated May 9, 2023, 4:05 a.m. Published Dec 28, 2022, 2:28 p.m.
A group of FTX users are asking a U.S. court to make sure they are the first to get repaid in the crypto exchange's bankruptcy proceedings, court filings from Tuesday show.
A class-action lawsuit filed with the U.S. Bankruptcy Court for the District of Delaware (the same court where the cryptocurrency exchange filed for Chapter 11 bankruptcy protection in November) accuses former FTX executives of intentionally misappropriating customers' funds to fund risky strategies and a lavish lifestyle in the Bahamas "in direct violation of FTX’s own customer agreements and terms of service."
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"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 filing says.
Read more: FTX Violated Its Own Terms of Service and Misused User Funds, Lawyers Say
FTX founder Sam Bankman-Fried is facing felony charges in the U.S., and two other executives, Gary Wang and Caroline Ellison, have pleaded guilty to fraud charges.
Plaintiffs of the new class-action lawsuit, exchange customers Austin Onusz, Cedric Kees van Putten, Nicholas J. Marshall and Hamad Dar and "all others similarly situated," want FTX customers to have "priority to repayment of customer property," and want the court to declare that any customer property held on behalf of customers don't belong to the company.
They are also seeking damages in an amount to be determined at a trial by jury.
Read more: FTX's Sam Bankman-Fried Borrowed From Alameda to Buy Robinhood Shares
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