FTX Collapse Aftermath: Who Gets the Billions in Forfeited Assets?
LUCKNOW (CoinChapter.com) — The FTX exchange has completely collapsed, and its former CEO, Sam Bankman-Fried (SBF), is now behind bars. Consequently, the downfall of FTX has led to a new dispute over the company’s billions in forfeited assets. Various parties, including FTX debtors, the firm’s Bahamian entity, and victims of the exchange’s collapse, are now fighting for a share of these assets.
On June 14, lawyers representing FTX debtors and FTX Digital Markets filed a petition in the U.S. District Court for the Southern District of New York. They argue that they had a “superior right” to the forfeited assets that may be used to satisfy the court’s $11 billion judgment against SBF. The legal team believes that FTX’s planes, bank funds, Robinhood stock, and political contributions from former executives should help the more than 1 million victims of Bankman-Fried’s crimes.
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Others Also Seek a Share of the Assets
The debtors are not the only ones seeking a portion of the forfeited assets. Additionally, lawyers representing Emergent Fidelity Technologies have also filed a petition.
This firm, which held more than 55 million Robinhood shares on behalf of Sam Bankman-Fried and FTX co-founder Gary Wang, is now asserting its claim. In their petition, Emergent Fidelity Technologies focused exclusively on reclaiming those shares and an additional $20 million held by the firm.
A group of FTX users, represented by lawyers Adam Moskowitz and David Boies, has also filed a petition. They said that the authority should hand over the forfeited assets directly to them rather than to the debtors.
They worry that conflicts within the bankruptcy estate could lead to an unfair distribution of the assets. Sunil Kavuri, a plaintiff in the legal battle over FTX’s forfeited assets, has now joined forces with other claimants. He believes in the fair distribution of forfeited assets among FTX users rather than giving all to the debtors.
The Wait for a Decision Continues…
Judge Lewis Kaplan has not yet made a decision on the petitions. FTX’s bankruptcy case has a proposed plan to pay back creditors. However, some, like Sunil Kavuri, have objected, saying the plan doesn’t consider losses from U.S. taxes.
As Bankman-Fried serves his 25-year prison sentence and appeals his case, other former FTX and Alameda executives have pleaded guilty and await sentencing. Caroline Ellison, Gary Wang, and Nishad Singh testified against Bankman-Fried. Additionally, Ryan Salame, former co-CEO of FTX Digital Markets, will start serving his 90 months in prison on Aug. 29.
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