FTX Recovery Trust Files Lawsuit Against Genesis Digital Assets
Overview of the Legal Action
The FTX Recovery Trust has initiated a significant legal battle, filing a lawsuit against Genesis Digital Assets, its affiliates, and co-founders Rashit Makhat and Marco Krohn. This legal move aims to reclaim a massive $1.15 billion, which the trust alleges was fraudulently transferred by Sam Bankman-Fried, the co-founder of the now-defunct cryptocurrency platform. The case was submitted to the US Bankruptcy Court in the District of Delaware, seeking to address claims of misappropriated and commingled assets that belonged to FTX.
Allegations of Fraudulent Transfers
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Central to the lawsuit are allegations that a vast amount of the disputed funds originated from customer deposits at the FTX.com exchange. The FTX Recovery Trust asserts that Sam Bankman-Fried’s financial maneuvers with Genesis Digital exemplify typical fraudulent transfers. These transactions allegedly occurred in 2021, a period during which Bankman-Fried reportedly stood to benefit substantially without personal risk.
Implications Under Bankruptcy Law
The complaint, anchored in US bankruptcy law, outlines multiple claims suggesting that these transfers should be classified as avoidable fraudulent transfers. The trust’s argument rests on the notion that the shares Bankman-Fried acquired in Genesis were ultimately controlled by Alameda Research, an entity where he held a 90% ownership stake.
Potential for Additional Recoveries
Beyond the primary goal of recovering $1.15 billion, the trust is also pursuing any additional amounts that could be identified during the discovery phase of the legal process. The lawsuit further seeks compensation for attorneys’ fees, accruing interest, and other legal costs incurred.
Third Creditor Distribution on the Horizon
This legal action coincides with the FTX Recovery Trust’s preparations for its third distribution to creditors affected by the exchange’s collapse. These payments are scheduled to commence on September 30, 2025, marking a critical step in addressing the financial fallout from FTX’s downfall.
Market Impact and Token Volatility
In recent market activity, the value of FTX’s native token, FTT, experienced significant volatility. After surging above $1 last week, the token is currently trading at $0.82. This fluctuation underscores the ongoing uncertainty and market reactions surrounding developments related to the FTX saga.
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