FTX customers seek judgment concerning who owns digital assets

By Sarah Lizee

Olympia, Wash., Feb. 2 – A group of FTX Trading Ltd. customers have filed an adversary proceeding against the company, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

The action seeks a declaration that the assets customers deposited, held, received or acquired on the FTX.com platform are customer property and not property of the debtors’ estates.

“Under the clear and unambiguous language of the FTX.com terms of service, title to digital assets on the FTX.com platform remained at all times with the customer and did not transfer to FTX Trading Ltd., which owned and controlled the FTX.com platform,” the group said in court documents.

“Digital assets held in customer accounts expressly were not the property of and could not be loaned to FTX Trading or any of its affiliated debtors.”

The group said FTX Trading, through its sister company, Alameda Research LLC, “surreptitiously siphoned off customer funds for its own use,” leading to over $8 billion in customer deposits going missing.

The group noted that Sam Bankman-Fried, the co-founder and majority owner of both FTX Trading and Alameda, has been criminally charged for his role in defrauding FTX.com customers by misappropriating their deposits.

To date, FTX has classified customers as unsecured creditors and has frozen FTX.com customer withdrawals.

FTX has headquarters in the Bahamas and filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.