Gushiken Yona
A fierce legal battle erupted over control of his seized assets, in the aftermath of Sam Bankman-Fried’s conviction and imprisonment, as customers, creditors, and the government are each staking their claim, further complicating the already intricate FTX bankruptcy case.
In a June 14 filing in the United States District Court for the Southern District of New York, lawyers representing the FTX debtors and the firm’s Bahamian entity, FTX Digital Markets, argued that they had a “superior right” to assets that may be used to satisfy the court’s $11-billion judgment against Bankman-Fried.
The legal team claimed that FTX’s aircraft, funds held at Signature Bank, Farmington State Bank, and Silvergate Bank, the sale of shares of Robinhood stock, and political contributions associated with former FTX executives should benefit victims of the defunct exchange rather than be used for Bankman-Fried’s judgment.
However, a separate petition filed by a group of FTX customers emerged as a potential hurdle for the debtors. Represented by prominent crypto lawyers Adam Moskowitz and David Boies, the plaintiff group included Sunil Kavuri, an FTX customer who testified against SBF during his trial. Kavuri was also one of the creditors objecting to the proposed FTX reorganization plan.
The customer petition argued the seized assets should be returned directly to FTX users, bypassing the bankruptcy process altogether. They contended that Bankman-Fried directly stole their digital assets, and these funds rightfully belonged to them.
Judge Lewis Kaplan had yet to rule on either petition. The legal battle was likely to be complex, with each side presenting arguments regarding the legitimacy of their claims and the best course of action to recover lost funds. The fight over seized assets was just one facet of the ongoing FTX fallout. The overall bankruptcy case continued, with creditors like Kavuri voicing concerns about the proposed reorganization plan.
It was worth noting that while Sam Bankman-Fried, the disgraced co-founder of the then-crypto empire FTX, was now in jail serving his 25-year prison sentence, sentencing for other former FTX executives, including Caroline Ellison and Gary Wang, who cooperated with prosecutors, was still pending.
In May, a noticeably thinner Bankman-Fried, in an exclusive conversation following his sentencing, expressed deep regret regarding several of his decisions. One of his major regrets was stepping down from his position as the leader of the crypto giant FTX. He claimed that had he remained at the helm, FTX could have evolved into a flourishing company with a valuation of $80 billion. Bankman-Fried placed blame on the lawyers who assumed control of FTX after his departure, attributing the exchange’s downfall to their management.
The fight over seized assets is just one facet of the ongoing FTX fallout. The overall bankruptcy case continues, with creditors like Kavuri voicing concerns about the proposed reorganization plan. Meanwhile, sentencing for other former FTX executives, including Caroline Ellison and Gary Wang, who cooperated with prosecutors, is still pending.
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Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
