Victims of disgraced former FTX CEO Sam Bankman-Fried’s fraud seek a ruling that the forfeited assets of the failed cryptocurrency exchange belong to its customers, not the bankruptcy estate, calling it a “second act of theft.”
In May, the bankruptcy estate proposed a reorganization that would have 98 percent of its creditors get 118 percent of their claims in cash with 60 days of court approval. The estate filed during the “crypto winter,” when most digital currencies dropped dramatically in price.
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The victims’ attorneys, Adam Moskowitz and David Boies, said the bankruptcy process had left many “FTX customers feeling ‘aggrieved and robbed.'” Many of these victims believe the process is a “second act of theft” and that the “FTX bankruptcy estate remains to be the same fraudulent corporate entity” as the FTX run by Bankman-Fried.
In early November, Bankman-Fried was convicted of five counts of conspiracy and two counts of wire fraud. He was subsequently sentenced to 25 years in prison.
CoinDesk reported:
FTX collapsed in November 2022. The lawyers said that the jury found SBF stole no less than $8 billion from FTX customers. Bankman-Fried, who was also ordered to forfeit $11 billion, plans to appeal his sentence and conviction. “If not for SBF’s crimes for which he was convicted — i.e., the theft and misuse of customer assets — the customers would have today owned their crypto investments,” the filing said.
The filing also points out that the bankruptcy code requires prioritizing certain creditors over others, such that holders of FTX’s FTT token are near the bottom of the priority list. “It is unlikely that holders of that token will receive compensation from the estate,” it said.
Moskowitz explained to CoinDesk, “We don’t know what the damages will be because complete accounting has not been done.”
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.