FTX customers sue Sam Bankman-Fried as part of Chapter 11 case


Customers of defunct cryptocurrency exchange FTX filed a bankruptcy claim in California, hoping to be among the first to collect some of the billions lost in the collapse of Sam Bankman-digital-asset Fried’s business.

A group of four FTX clients urged a bankruptcy judge on Tuesday to decide that their interests in the Bahamas-based exchange are theirs, not FTX’s. According to a Delaware bankruptcy court petition, they want the judge to give customers repayment precedence over other FTX creditors. The group is also requesting that the claim be certified as a class-action lawsuit.

Bankman-representative Fried’s did not immediately respond to an email seeking comment on the bankruptcy suit late Tuesday.

Bloomberg News reported Tuesday that federal authorities are looking into an alleged cyberattack that emptied more than $370 million from FTX just hours after the exchange’s Chapter 11 filing hit court dockets last month.

The amount stolen is far less than the billions of dollars that Bankman-Fried is accused of stealing while running FTX. He’s also accused of buying beachfront property in the Bahamas for hundreds of millions of dollars and making large political contributions.

Bankman-Fried, noted for his floppy hair, T-shirts, and shorts, blamed FTX’s demise on his own poor management and wrong-way bets through Alameda. He has stated that he had no intention of defrauding investors.

Customers “should not have to stand in line with secured or general unsecured creditors in these bankruptcy proceedings only to share in the FTX Organization and Alameda’s lessened estate assets,” the group stated in the suit.

Aside from Bankman-Fried, the customer group also sued Caroline Ellison, Alameda’s previous CEO and the FTX founder’s ex-girlfriend. Customers believe both should be held accountable for breaching fiduciary duties to them and converting their holdings improperly.

Ellison did not reply quickly to a request for comment.

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