Updates and Settlement Information
Investors are pursuing FTX cryptocurrency lawsuits after suffering financial losses following the collapse of the FTX exchange, alleging that FTX and its executives’ mismanagement of client funds caused the cryptocurrency exchange to file for bankruptcy.
Individuals who have suffered financial losses of $10,000 or more after investing in cryptocurrency on the following platoforms;
2023 FTX Lawsuit Update
- FTX was exposed for using customer’s money to fund its executives' lavish lifestyles and risky investments by its sister company, Alameda Research.
- Investors rushed to withdraw their funds creating an $8 billion gap that FTX could not cover.
- FTX immediately froze customers' accounts and filed for bankruptcy just days later, resulting in massive losses to investors.
- The lawsuits against FTX and its executives seek to hold them accountable for their actions and recover losses suffered by investors.
- New cases are being investigated and FTX lawsuit payouts may be available as the company works through bankruptcy proceedings.
- FIND OUT IF YOU ARE ELIGIBLE FOR A FTX LAWSUIT PAYOUT
FTX Exchange Lawsuit Overview
The FTX cryptocurrency exchange, which was launched in May of 2019 by Sam Bankman-Fried and Gary Wang, quickly gained popularity, becoming the third largest crypto exchange by volume as of June 2021, with a valuation of approximately $32 billion.
Only three years after the exchange’s launch, FTX was exposed for using billions of dollars of customer investments to fund its sister company, Alameda Research, which was also owned by Sam Bankman-Fried.
Investigations have revealed that FTX’s executive Sam Bankman-Fried intentionally misused FTX customer funds for his personally owned hedge fund, Alameda Research, to place risky bets in the cryptocurrency market for personal gain, and to purchase more than $250 million is luxury real estate for its executives use.
When customers learned of the company’s commingling of funds between FTX and Alameda Research, investors withdrew billions within several days, causing FTX to go bankrupt and freeze customer’s access to their digital assets.
FTX investors are now left unable to access billions of dollars worth of digital assets that are tied up in the platform’s bankruptcy proceedings.
Multiple lawsuits have been filed against FTX and its founder, Sam Bankman-Fried, raising allegations that FTX illegally used customer funds that are now subject to third party creditors to pay off FTX’s debts. Individuals are claiming that FTX broke its customer service terms of agreement by shuffling investors’ money between affiliated entities, and failing to hold customer investments safely in accounts on their behalf.
Who is Eligible for a FTX Lawsuit?
Lawyers are reviewing FTX lawsuits for individuals who meet the following criteria;
- Invested in cryptocurrency through FTX
- Suffered financial losses of $10,000 or more
Lawyers are also investigating cases for individuals who invested in other cryptocurrency exchanges that have suffered liquidity crises that caused customers to lose money, or have their assets frozen. These include;
Learn More About
FTX Crypto Lawsuits
Following the FTX exchange collapse, lawyers are pursuing FTX settlements from a number of companies and entities on behalf of investors who lost money.SEE IF YOU QUALIFY FOR COMPENSATION
Latest FTX Cryptocurrency Settlement and Lawsuit Updates
June 2023 Update: The U.S. JPML issued a transfer order (PDF) on June 5, establishing a FTX multidistrict litigation (MDL) before U.S. District Judge Michael Moore in the Southern District of Florida for coordinated pretrial proceedings. The formation of the FTX MDL comes in response to a growing number FTX crypto lawsuits being filed by customers who claim the now bankrupt exchange stole their digital assets and blocked them from making withdrawals.
May 2023 Update: A panel of federal judges heard oral arguments on May 25, 2023, to determine whether to centralize FTX cryptocurrency exchange lawsuits brought before the federal court system. If an FTX lawsuit MDL is established, the claims will all be transferred to one court for discovery and a series of bellwether trials, as well as any settlement negotiations.
March 2023 Update: With a growing number of FTX class action lawsuits and individual investor lawsuits being pursued against a number of different entities, a motion has been filed with the U.S. Judicial Panel on Multidistrict Litigation, seeking to consolidate and centralize the cases before one U.S. District Judge for coordinated pretrial proceedings.
Ties Between FTX and Alameda Research Exposed
FTX customers first became concerned about FTX’s stability after a CoinDesk report was published on November 2, 2022. The report stated that Alameda Research, also owned by Sam Bankman-Fried, held a significant proportion of FTX’s native FTT token in its portfolio.
Specifically, the CoinDesk report stated that as of June 30, 2022, Alameda’s total company assets amounted to $14.6 billion, with its largest portion of assets being $3.66 billion unlocked FTT. CoinDesk reported Alameda’s third largest asset on its books consisted of $2.1 billion of FTT collateral.
The findings raised liquidity concerns and allegations of misused funds between FTX and Alameda. Investors quickly realized that much of Alameda’s assets were made up of FTX’s proprietary FTT token, which is a made-up token, and not backed by any real currency, whether flat or digital.
FTX Liquidity Crisis Leads To Bankruptcy
After the release of the CoinDesk report on November 2, investors became concerned that their funds were not being held on the open crypto marketplace as previously agreed upon, leading investors to make a “run on the bank”.
By November 6, 2022, investors had withdrawn approximately $6 billion from FTX within 72 hours, leaving the company unable to fulfill demands due to their shortage of funds.
When FTX could not cover the withdrawal requests or finalize a proposed buyout plan with Binance, the company froze customers’ access to the platform to prevent any further withdrawal requests. FTX filed for Chapter 11 bankruptcy on November 11, 2022. Bankman-Fried’s Alameda Research would also go on to file for bankruptcy.
FTX Violated Its Customer Agreement By Misusing Funds
With billions of dollars now tied up in FTX’s bankruptcy proceedings, investors are claiming FTX’s use of customer funds for separate business ventures violated the FTX Terms of Service Agreement. .
In a complaint (pdf) filed against Samuel Bankman-Fried by the U.S. Securities and Exchange Commission (SEC), officials stated that FTX’s Terms of Service Agreement specifically state that;
- Customers control the Digital Assets held in Accounts
- Customers Digital Assets shall at all times remain with you and shall not transfer to FTX
- None of the digital assets in your account are the property of, or shall or may be loaned to, FTX Trading
- You may redeem all or part of any E-Money held in your Account at any time
Separately, FTX advertised on its website under its Key Principles for Ensuring Investor Protections on Digital-Asset Platforms, that FTX “segregates customer assets from its own assets across our platforms.”
The document further claimed that “liquid assets for customer withdrawals…[to] ensure a customer without losses can redeem its assets from the platform on demand”.
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Timeline of FTX Collapse
Is there a FTX Class Action Lawsuit?
Yes, a number of former investors have joined a FTX class action lawsuit, demanding priority access to their funds, which were frozen while FTX undergoes bankruptcy proceedings.
In FTX class action lawsuits, investors are claiming their funds should be returned to them before creditors are allowed to make claims in FTX’s bankruptcy proceedings.
Plaintiff’s are arguing that FTX violated its Terms of Service Agreement and illegally used investor funds to accumulate debt, which now puts investor funds at risk. Many of these plaintiff’s fear that no funds will remain to repay customers after creditors chip away at any remaining assets FTX still has.
In a FTX class action lawsuit (pdf) filed in the U.S. Bankruptcy Court for the District of Delaware, several plaintiff’s are claiming customers never permitted FTX to use investor funds for its own purposes, including borrowing or using it for operating expenses.
The complaint calls FTX’s use of customer funds for separate business ventures an “impermissible co-mingling, misappropriation, misuse, or conversion of customer property”.
FTX Lawsuits Centralized Into Multidistrict Litigation
In response to a motion to transfer all FTX lawsuits before one judge for coordinated pretrial proceedings, the U.S. Judicial Panel on Multidistrict Litigation (JPML) issued a transfer order on June 5, 2023, ordering all FTX lawsuits filed throughout the federal court system to be centralized before U.S. District Judge Michael Moore in the Southern District of Florida for coordinated pretrial proceedings.
As proceedings under the FTX MDL begin, it is expected that U.S. District Judge Michael Moore will ultimately select a small group of representative “bellwether” cases for early trial dates, to help gauge how juries are likely to respond to certain evidence regarding the mounting allegations against the failed cryptocurrency exchange.
While the outcomes of these bellwether trials will not be binding on other plaintiffs, they may help drive the parties toward settlements that would avoid the need for potentially hundreds of eventual individual class action trials to be held.
How to join the FTX class action lawsuit
Hiring a lawyer with experience in cryptocurrency and securities law can help you understand the legal issues involved in your case and determine the best course of action. A lawyer can also help you gather evidence, file legal documents, and represent you in court.
If you are unsure whether you need a lawyer for your FTX lawsuit, consider consulting with one to discuss your options and evaluate your case’s strengths and weaknesses. Law firms are offering free consultations to those who have lost money as a result of the FTX collapse.
Free Case Evaluation
If you lost money from the collapse of FTX cryptocurrency exchange, submit information for review by a lawyer to determine if you may be eligible for a FTX settlement.
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