The aftermath of the FTX collapse continues to unfold, with a new legal battle brewing over millions of dollars in assets seized from Sam Bankman-Fried (SBF), the former CEO currently serving a 24-year prison sentence.
Several parties are seeking control over the seized assets of SBF and former FTX directors. The assets include aircraft, funds at various banks, shares of Robinhood stock once owned by SBF, and even political contributions tied to FTX managers.
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 to obtain control of the assets seized from SBF.
The debtors claim that they have the “superior right” to the seized assets and that these funds should be used to repay creditors. In their June 14 submitLawyers for the debtors argued that this approach would provide 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. The group of plaintiffs includes Sunil Kavuri, an FTX client who testified against SBF at his trial, represented by prominent crypto attorneys Adam Moskowitz and David Boies.
Kavuri is also among the creditors objecting to the FTX’s proposed reorganization plan.
The client’s petition argues that the seized assets should be returned directly to FTX users, bypassing the bankruptcy process entirely. They claim that Bankman-Fried directly stole their digital assets, and that these funds rightfully belong to them.
Court battle
Judge Lewis Kaplan has yet to rule on both requests. The legal battle is likely to be complex, with both sides putting forward arguments about the legitimacy of their claims and the best course of action to recover lost money.
The battle over seized assets is just one facet of the ongoing fallout from the FTX. The overall bankruptcy case continues, with creditors like Kavuri raising concerns about the proposed reorganization plan.
In addition, convictions for other former FTX executives, including Caroline Ellison and Gary Wang, who cooperated with prosecutors, are 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 overall and long-term recovery rates for victims.