Defrauded FTX Customers File Proposed Class-Action Suit, Arguing They Should be First In Line for Repayment

FTX customers suing Sam Bankman-Fried argue they should be first in line to recoup funds from the bankrupt crypto exchange.

Sam Bankman-Fried escorted out of Manhattan court, dressed in suit.
Sam Bankman-Fried leaves Manhattan Federal Court after a bail hearings on Dec. 22. (Photo by David Dee Delgado/Getty Images)

Defrauded customers of FTX filed a proposed class action lawsuit against Sam Bankman-Fried and executives linked to his crypto endeavours, arguing they should have priority in recouping funds from the now-bankrupt exchange.

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The lawsuit, filed on Dec. 27 in Delaware bankruptcy court, was brought forward by Austin Onusz, Cedric Kees van Putten, Nicholas Marshall and Hamad Dar, residents of the U.S., Netherlands, U.K and Turkey, respectively. The plaintiffs claim their holdings in FTX, which were misappropriated by Bankman-Fried’s crypto fund Alameda Research, belong to them instead of FTX.

The customers also argue that they should be first in line for repayment over creditors of the crypto exchange, which filed for Chapter 11 bankruptcy in November.

“Customer Class members should not have to stand in line along with secured or general unsecured creditors in these Bankruptcy Proceedings just to share in the diminished estate assets of the FTX Group and Alameda,” reads the suit. “Cash and assets traceable to customers, which never belonged to FTX and Alameda, should be earmarked solely for customers, and victimized customers should likewise have priority to any cash possessed or recovered by Debtors.”

Other defendants named in the lawsuit include Caroline Ellison, former CEO of Alameda Research, and Gary Wong, co-founder and former chief technology officer of FTX, who both struck plea deals with U.S. prosecutors earlier this month regarding their roles in the crypto exchange’s downfall. Nishad Singh, FTX’s former director of engineering, was also named in the suit.

Attorneys for the defendants did not respond to requests for comment.

Bankman-Fried, who is currently out on a $250 million bond and staying with his parents in California, was extradited to the U.S. from the Bahamas on Dec. 21. He is facing eight counts including wire fraud violation of campaign finance law, in a criminal trial that will be presided over by U.S. District Judge Lewis Kaplan.

A spokesperson for Bankman-Fried did not respond to requests for comment.

Defrauded FTX Customers File Proposed Class-Action Suit, Arguing They Should be First In Line for Repayment