FTX Lawsuit

An FTX lawsuit in the southern district may provide an avenue for investors to seek reimbursement for funds they couldn’t retrieve following the FTX collapse. Allegations in the district court suggest that FTX’s downfall happened after Sam Bankman Fried, associated with Alameda Research, utilized FTX investor funds from the crypto exchange in unauthorized and high-risk ventures.

Why are People Filing FTX Lawsuits? 

FTX investors are filing FTX lawsuits in the southern district court to reclaim financial damages following the FTX collapse and the subsequent cryptocurrency exchange bankruptcy. After the FTX crypto exchange’s bankruptcy in November 2022, a number of customers were left unable to access their FTX customer funds.

Other crypto-related lawsuits echoing this scenario include legal filings against Gemini Earn and Genesis Global Capital. Similar to FTX’s predicament, Genesis faced bankruptcy in January 2023. While Gemini Earn didn’t announce bankruptcy, its customers encountered challenges withdrawing assets in November 2022 due to liquidity concerns.

FTX customer lawsuits allege they were deceptively convinced by the platform that their investments were low-risk, being “highly secure” and “shielded”. Legal representatives are onboarding claimants for both individual and class action FTX investor lawsuits.

Besides targeting the FTX entities, litigants are also naming FTX’s co-founder, Sam Bankman Fried, and other FTX executives in the lawsuits. Furthermore, plaintiffs are suing celebrities, including Larry David, Tom Brady, and Gisele Bundchen, who were brought on as brand ambassadors during the Super Bowl to champion FTX’s offerings to American consumers.

FTX Lawsuit Updates

There have not been any updates, including court-sanctioned settlements or upcoming jury trials, on the FTX lawsuit since May 2023. Both parties are in discussions about the possibility of merging the FTX crypto exchange lawsuits. As of now, the ongoing multidistrict legal process has received the designation MDL No. 3076, with the title “In Re: FTX Collapse Litigation.”

Investors must note that the last day to lodge an FTX bankruptcy claim was June 30, 2023.

February 2023: Edwin Garrison, along with other plaintiffs, proposed moving all lawsuits linked to the FTX collapse to the southern district court in Florida. Garrison and fellow class-action plaintiffs initially presented their lawsuit in November 2022. 

Usually, consolidating a large number of cases can make the legal proceedings more streamlined, especially when they share commonalities. However, some plaintiffs and defendants are against centralization, arguing that bringing together FTX lawsuits might not be more efficient. Instead, they believe it might exacerbate the delays and inflate litigation expenses.

April 2023: Moskowitz Law Firm, representing FTX group, is among the defendants listed in a class action lawsuit. Allegations say that the firm assisted Sam Bankman Fried in enacting fraudulent activities. 

May 2023: The U.S. Judicial Panel on Multidistrict Litigation is still deliberating on whether to consolidate the FTX cryptocurrency class-action lawsuits, encompassing all the FTX investor individual lawsuits into a singular multidistrict litigation (also known as an MDL). 

Can I File an FTX Lawsuit? 

FTX investors, who faced losses in excess of $20,000 due to the FTX collapse and subsequent bankruptcy may be eligible to initiate an FTX lawsuit to reclaim their assets.

Those who lost funds or found their digital assets inaccessible due to bankruptcy or liquidity challenges at other crypto entities, such as Genesis Global Capital or Gemini Earn, can also consider lawsuits against the mentioned firms to recover their assets.

The window to file a claim in any bankruptcy scenario is narrow. The last day to register an FTX Lawsuit claim was June 30, 2023.

Class Action FTX Lawsuits

Investors have launched multiple FTX lawsuits, with a significant number emerging from California and Florida. Among these claimants is Stephen Pierce, a resident of Maryland. In November 2022, Pierce initiated an FTX class action lawsuit representing himself and others, presenting it before the U.S. District Court in the Bay Area, specifically the San Francisco and Oakland jurisdictions.

In January 2022, Pierce transferred $19,986 into an FTX account. However, when he pursued a withdrawal in November of the same year, he never received his funds. His lawsuit details that Pierce is one amongst a large pool of more than one million FTX customers who saw their assets vanish amidst the FTX collapse.

The complaint further elaborates, “Pierce had put his trust and funds into the Sam Bankman Fried-operated cryptocurrency exchange, FTX US. Unfortunately, like many, Pierce’s savings evaporated when the unstable foundation of Bankman Fried’s FTX platform crumbled.”

SEC Sues FTX

In December 2022, the U.S Securities and Exchange Commission (SEC) initiated a lawsuit against Sam Bankman Fried, Gary Wang, and Caroline Ellison. The regulatory body accused these FTX executives of devising a “scheme to defraud equity investors in FTX Trading Ltd.” among other allegations.

Per the SEC’s filed complaint, “Unbeknownst to those investors (and to FTX’s trading customers), Bankman Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.” 

Furthermore, numerous district courts have slapped criminal charges on Bankman Fried, including conspiracies to perpetrate wire fraud against FTX customers.

Can I Get My Money Back from FTX? 

FTX has said that certain customers might be able to access their funds. FTX Japan, in December 2022, announced its customers could start withdrawals by February 2023. However, in the wake of the FTX collapse, FTX globally put a halt on withdrawals after their bankruptcy filing in November 2022. There have been no clear updates on when FTX customers can request withdrawals.

A number of withdrawal requests are stuck amidst the FTX’s bankruptcy developments. Investors could potentially submit a claim in the bankruptcy proceedings, provided they can substantiate that FTX owes them money. Nevertheless, the magnitude of FTX’s bankruptcy dossier is colossal, encompassing more than 100,000 creditors, and could potentially escalate to more than a million, as per Reuters.

Miles Fuller, head of the government solutions division at the crypto tax establishment, TaxBit, told NerdWallet, “If you’re not comfortable, talk to a professional to assist you. Because if you have a decent amount of money — or really any amount of money — you don’t want to forgo any rights you may have.” 

Given that lodging a claim with bankruptcy court can be a tedious and prolonged talk, investors may lean towards pursuing an FTX lawsuit, guided by a specialized FTX bankruptcy attorney.

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