Various factions have staked their claims on the assets central to the legal case against the ex-CEO of FTX, Sam Bankman-Fried, who is currently incarcerated for 25 years. In a filing dated June 14 in the United States District Court for the Southern District of New York, attorneys representing the FTX debtors and the company’s Bahamian entity, FTX Digital Markets, argued that they should have priority access to the assets intended to cover the court’s $11 billion ruling against Bankman-Fried. They contended that FTX’s assets, including aircraft, funds in various banks, the sale of Robinhood stock, and political donations linked to former FTX executives, should be utilized to compensate victims rather than fulfilling Bankman-Fried’s judgment.
The filing stated, “Adjusting the Preliminary Forfeiture Order to allocate Specific Property to the Debtors and/or FTX Digital will benefit all creditors and stakeholders involved in the Debtors’ Chapter 11 bankruptcy proceedings and FTX Digital’s liquidation in The Bahamas, particularly the victims of Bankman-Fried’s crimes.” It emphasized the importance of using the existing claims administration structure to maximize funds for distribution while minimizing additional costs.
The clamor for a share of the assets was evident as the debtors’ plea was followed by two petitions on June 14 from attorneys representing the company and joint liquidators of Emergent Fidelity Technologies, focusing on Robinhood shares and $20 million held by Emergent. Additionally, a group of claimants, represented by crypto lawyers Adam Moskowitz and David Boies, demanded that the forfeited assets be surrendered to FTX users rather than the debtors. Sunil Kavuri, an FTX customer who testified against Bankman-Fried, was among the plaintiffs in this petition.
While Judge Lewis Kaplan had not reached a decision on potential hearings or judgments related to the petitions at the time of writing, FTX’s bankruptcy case in the District of Delaware had proposed a reorganization plan to repay creditors, which faced objections from some, including Kavuri, citing U.S. tax-related losses not being factored in.
Bankman-Fried’s conviction on seven felony charges linked to the mishandling of customer funds between FTX and Alameda Research led to his 25-year prison sentence. His legal team has filed an appeal, and he will remain in custody at the Metropolitan Detention Center in Brooklyn during the process. Other former FTX and Alameda executives involved in the company’s collapse are also facing legal consequences, with some already sentenced or awaiting sentencing.