FTX Users Sue for Priority Repayment and Damages in Bankruptcy Proceedings

The class-action lawsuit accuses the bankrupt crypto exchange's executives of intentionally misappropriating customer funds to fund risky strategies and their lavish lifestyles.

AccessTimeIconDec 28, 2022 at 2:28 p.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A group of FTX users are asking a U.S. court to make sure they are the first to get repaid in the crypto exchange's bankruptcy proceedings, court filings from Tuesday show.

A class-action lawsuit filed with the U.S. Bankruptcy Court for the District of Delaware (the same court where the cryptocurrency exchange filed for Chapter 11 bankruptcy protection in November) accuses former FTX executives of intentionally misappropriating customers' funds to fund risky strategies and a lavish lifestyle in the Bahamas "in direct violation of FTX’s own customer agreements and terms of service."

"FTX executive defendants failed to institute any corporate controls and were therefore able to cause, direct or allow the misappropriation of billions of dollars in customer funds and digital assets deposited or held worldwide at FTX," the filing says.

FTX founder Sam Bankman-Fried is facing felony charges in the U.S., and two other executives, Gary Wang and Caroline Ellison, have pleaded guilty to fraud charges.

Plaintiffs of the new class-action lawsuit, exchange customers Austin Onusz, Cedric Kees van Putten, Nicholas J. Marshall and Hamad Dar and "all others similarly situated," want FTX customers to have "priority to repayment of customer property," and want the court to declare that any customer property held on behalf of customers don't belong to the company.

They are also seeking damages in an amount to be determined at a trial by jury.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.