- FTX Recovery Trust initiates legal action in Delaware bankruptcy court against Genesis Digital Assets and affiliates.
- The suit targets $1.15 billion in transfers allegedly made using commingled customer funds under Sam Bankman-Fried’s direction.
- This clawback effort aims to bolster creditor recoveries amid ongoing FTX bankruptcy proceedings.
The FTX Recovery Trust has filed a complaint against Bitcoin mining company Genesis Digital Assets, seeking to claw back $1.15 billion in alleged fraudulent transfers. The lawsuit, lodged in the U.S. Bankruptcy Court for the District of Delaware on September 23, 2025, accuses former FTX leadership of misusing customer funds to purchase overvalued shares.
Transaction breakdown: Alameda Research, FTX’s trading arm, reportedly paid $700 million in September 2021, $200 million in February 2022, and $250 million in May 2022 for GDA equity. These deals occurred as Alameda’s debt to FTX ballooned, per the filing.
The complaint alleges the transfers were preferential and fraudulent, violating bankruptcy codes and fiduciary obligations. Genesis Digital, a major player in Bitcoin mining with facilities worldwide, is accused of receiving funds it knew or should have known were improper.
“Despite the ballooning debt Alameda owed FTX.com, Bankman-Fried caused Alameda to pay more than $1.15 billion for wildly overvalued GDA shares,” states the lawsuit. This quote underscores the Trust’s claim of reckless conduct by Sam Bankman-Fried, who is currently serving a 25-year prison sentence.
Broader recovery efforts: The action aligns with the Trust’s mandate to maximize asset recoveries for FTX creditors following the exchange’s November 2022 collapse. Recent distributions include $1.6 billion set for September 30, with cumulative payouts potentially reaching 95% for U.S. customers.
Genesis Digital Assets has not issued a public statement, but industry observers note potential defenses around due diligence and market valuations at the time. The case may involve complex KYC verifications and scrutiny of smart contract usages in related transactions.
Implications for the sector: Successful recovery could provide a precedent for clawbacks in crypto bankruptcies, emphasizing risks in intertwined corporate structures. However, it may strain relationships between miners and investors amid Bitcoin’s volatile price around $112,000.
Check here for insights on Bitcoin. For related coverage, check Cryptopress.site on FTX recovery.
Stakeholders advise caution, as litigation outcomes remain uncertain in this evolving regulatory landscape.
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