The FTX Recovery Trust, tasked with managing the bankruptcy of cryptocurrency exchange FTX, has filed a lawsuit to recover over $1.15 bn in funds allegedly misappropriated by former FTX CEO Sam Bankman-Fried.
The complaint, lodged on Monday in the US Bankruptcy Court for the District of Delaware, targets crypto mining firm Genesis Digital Assets (GDA), its affiliates, and co-founders Rashit Makhat and Marco Krohn.
The lawsuit claims that in 2021 & 2022, Bankman orchestrated investments in GDA using commingled customer funds from FTX, funneled through its sister company, Alameda Research.
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The filing alleges that Alameda paid over $500 million for 154 preferred GDA shares at inflated prices and transferred an additional $550.9 million directly to GDA co-founders.
The complaint states:
By 2021, Bankman-Fried had diverted billions in customer funds from FTX.com to Alameda. Despite Alameda’s mounting debt to FTX, he authorized payments exceeding $1.15 billion for overvalued GDA shares.
The trust argues that these transactions were designed to personally enrich Bankman-Fried, who owned 90% of Alameda, while leaving FTX’s creditors and customers to bear the losses.
The filing also highlights that GDA, based in Kazakhstan during an energy crisis, provided misleading financial documents to justify the investments.
FTX Recovery Trust Ongoing Recovery Efforts
This lawsuit is part of the FTX Recovery Trust’s broader efforts to reclaim funds lost in the exchange’s 2022 collapse.
FTX filed for bankruptcy that year, and several former executives, including Bankman-Fried, are now incarcerated.
The trust has already secured a $175 million settlement in 2023 from Genesis Global Trading, a separate entity. It distributed $1.2 billion to creditors in February and $5 billion in May.
An additional $1.6 billion is slated for creditors on September 30.
