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FTX Customers Should Be Paid First, Lawsuit Claims

FTX customers have filed a class action lawsuit stating that they should be paid first after the collapsed crypto exchange misappropriated their funds.

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FTX customers have filed a class action lawsuit against the exchange and its executives including Sam Bankman-Fried.

According to the lawsuit filed in the US Bankruptcy Court in Delaware, FTX had commited to segrgating customer accounts but instead misappropriated them. Because of this, customers should be repaid first, the lawsuit states.

“Customer class members should not have to stand in line along with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished estate assets of the FTX Group and Alameda,” said the complaint.

Read more: Sam Bankman-Fried Set for US Extradition

SBF was arrested in the Bahamas on 12 December 2022 at the request of the U.S. Government, based on a sealed indictment filed by the Southern District of New York, and is currently set for US extradition.

Meawhile, news has surfaced that SBF and former FTX executive Gary Wang borrowed over US$536 million from Alameda Research to buy around 56 milion shares and 8% of Robinhood Markets earlier this year.

The transactions were shown in a series of promissory notes in an affidavit from a dispute in US bankruptcy court in New Jersey on Tuesday.

Revelations of Alameda borrowing from FTX served as the dynamite that ultimately collapsed the crypto exchange.

Read more: “Epstein Treatment”: SBF’s Arrest Celebrated But Also Questioned

SBF attested to the loans in an affidavit submitted to a judge in Antigua in early December. Lawyers submitted the affidavit to BlockFi‘s bankruptcy judge on Tuesday.

In the affidavit, SBF said the loans were “capitalised into” Emergent Fidelity, of which he owns 90% and Wang owns 10%.