The aftermath of the FTX collapse continues to unfold, with a new legal battle emerging over millions of dollars in assets seized from Sam Bankman-Fried (SBF), the former CEO currently serving a 24-year prison sentence.
Multiple parties are seeking control of the assets seized from SBF and former FTX executives. The assets include airplanes, funds held at various banks, shares of Robinhood stock once owned by SBF, and even political contributions linked to FTX executives.
Multiple parties
FTX debtors, along with the company’s Bahamian arm, FTX Digital Markets, have filed a petition in the Southern District Court of New York seeking control of assets seized from SBF.
The debtors argue they have the “superior right” to the seized assets and that these funds should be used to repay creditors. In their June 14 filing, lawyers for the debtors claimed this approach would offer a greater recovery than what the current bankruptcy plan proposes.
However, a separate petition filed by a group of FTX customers has emerged as a potential hurdle for the debtors. Represented by prominent crypto lawyers Adam Moskowitz and David Boies, the plaintiff group includes Sunil Kavuri, an FTX customer who testified against SBF during his trial.
Kavuri is also one of the creditors objecting to the proposed FTX reorganization plan.
The customer petition argues the seized assets should be returned directly to FTX users, bypassing the bankruptcy process altogether. They contend that Bankman-Fried directly stole their digital assets, and these funds rightfully belong to them.
Court battle
Judge Lewis Kaplan has yet to rule on either petition. The legal battle is likely to be complex, with each side presenting arguments regarding the legitimacy of their claims and the best course of action to recover lost funds.
The fight over seized assets is just one facet of the ongoing FTX fallout. The overall bankruptcy case continues, with creditors like Kavuri voicing concerns about the proposed reorganization plan.
Additionally, sentencing for other former FTX executives, including Caroline Ellison and Gary Wang, who cooperated with prosecutors, is still pending.
The court’s decision on the seized assets will be closely watched, with implications for both FTX customers and the broader crypto ecosystem. The resolution of this case could impact the overall recovery rates for victims and influence the long-term impact of the exchange’s demise on the crypto industry.
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