FTX clients are launching a class action lawsuit against the bankrupt crypto exchange and its former executives to save their wealth. “Client group members should not have to queue with secured or unsecured creditors in these bankruptcy proceedings just to participate in the reduced assets of FTX Group and Alameda,” said a complaint filed in U.S. bankruptcy court in Delaware.
Insolvency managers in the Bahamas and Antigua, as well as bankruptcy estate managers of Blockfi, another insolvent crypto company, are already battling over the crypto exchange’s remaining assets. FTX did not immediately respond to a request for comment.
Client assets must not become bankruptcy assets
The plaintiffs want to ensure that traceable customer assets are not included in the bankruptcy estate of FTX or Almeda. If, on the other hand, the court rules that the client funds belong to the crypto companies, the private clients will claim a priority right of repayment over other creditors.
Crypto companies are lightly regulated and often based outside the United States. Therefore, deposits are not guaranteed like with US banks and brokers. This raises the question of whether the company or the customers own the funds deposited.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
