- FTX seeks to end litigation and class action complaints against venture capital firms and company officials accused of complicity in the cryptocurrency exchange’s collapse.
- In court filings Tuesday, FTX stated that consumer class action lawsuits would jeopardise its $16 billion recovery plan for bankruptcy repayments.
- On May 7, FTX announced it had gathered sufficient assets to repay 98% of its creditors 118% of what they are owed, with the remaining 2% receiving 100% of their claims, pending federal court approval.
OUR TAKE
Despite recent allegations of asset accumulation, FTX’s recovery process is taking much too long, testing the patience and confidence of creditors. The delays in resolving the situation have raised significant concerns about the company’s ability to efficiently manage and return the assets, especially in light of Sam Bankman-Fried’s misuse of company funds.
–Sylvia Shen, BTW reporter
FTX wants to put an end to litigation and class action complaints against venture capital firms and company officials accused of complicity in the cryptocurrency exchange’s collapse.
FTX warns lawsuits threaten $16B recovery plan
In court filings submitted on Tuesday to a federal court, FTX declared that disputes, including class action lawsuits from consumers, would imperil the company’s projected $16 billion recovery plan, which is intended for consumer repayments during bankruptcy proceedings.
Class action lawsuits were paused during FTX founder Sam Bankman-Fried‘s criminal trial but have since resumed. Plaintiffs in these class action lawsuits seek to seize assets held by federal prosecutors, pursue claims FTX is already litigating, and demand a 33% fee on recoveries they did not help obtain.
Adam Moskowitz, a lead lawyer for the plaintiffs, stated in the report, “Our goal is to provide relief for all FTX victims and we appreciate all parties that are helping our efforts.”
Also read: FTX promises full refunds for bankrupt exchange customers
Also read: FTX scandal: How SBF’s crypto empire finally fell apart
FTX assembles assets to repay creditors
FTX declared on May 7 that it had amassed sufficient assets to pay back 118% of its debtors, or 98% of their outstanding balance. Under a scheme that is pending approval by a federal court, the remaining 2% would get 100% of their claims.
FTX’s company news release said: “FTX has achieved this recovery level by monetising an extraordinarily diverse collection of assets, most of which were proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.”
FTX declared bankruptcy in November 2022. In March, founder and former CEO Sam Bankman-Fried was sentenced to 25 years in prison for embezzling billions from FTX customers to support his own risky investments, which included personal ventures and high-stakes trades through his hedge fund, Alameda Research.
