FTX Customers File Class Action Seeking Priority Rights Of Repayment

FTX, the world’s second largest cryptocurrency exchange based in the Bahamas, halted withdrawals and filed for bankruptcy last month after questions about its finance surfaced. Fearing the funds were dwindling fast, FTX customers anxiously tried to withdraw their assets from the once second-largest cryptocurrency exchange as FTX wrangled with liquidators in the Bahamas and Antigua and the bankrupt estate of Blockfi, another failed crypto company. They filed a class action lawsuit on the 27th of this month (December) against the FTX and its former executives including Sam Bankman-Fried. The litigation class seeks a commitment from FTX to segregate customer accounts and to prevent the diversion of customer funds, as they claim they should be repaid first. The proposed class action lawsuit seeks a declaration of traceable customer assets that are not FTX property on behalf of more than one million FTX customers in the United States and abroad. According to the lawsuit filed, the litigation class also wants the court to specifically identify traceable customer property that is under FTX but does not belong to Alameda, a hedge fund owned by FTX. If the court does determine this type of fund is the property of FTX, the group of clients will seek a ruling that they have the priority rights of repayment over other creditors.