FTX customers file class action lawsuit saying assets belong to them
The suit was filed against FTX and its founder Sam Bankman-Fried who was arrested in the Bahamas last week
FTX customers filed a class action lawsuit against the failed crypto exchange as the company's assets dwindle.
The filing is seeking a declaration that the company's holdings of digital assets belong to customers.
FTX was sued on Tuesday along with its former top executives including Sam Bankman-Fried.
FTX is already feuding with liquidators in the Bahamas and Antigua as well as the bankruptcy estate of Blockfi, another failed crypto company.
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FTX had pledged to segregate customer accounts and instead allowed them to be misappropriated and therefore customers should be repaid first, according to the lawsuit filed in U.S. Bankruptcy Court in Delaware.
"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.
FOX Business has reached out to FTX for comment, but has not yet heard back.
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The crypto exchange halted withdrawals last month and filed for bankruptcy after customers rushed to pull their holdings.
Authorities arrested Bankman-Fried in the Bahamas earlier this month. He has since been hit with multiple charges from the Southern District of New York and the Securities and Exchange Commission.
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The founder of FTX was flown to New York last week after deciding not to challenge his extradition.
The proposed lawsuit, which wants to represent more than 1 million FTX customers in the United States and abroad, seeks a declaration that traceable customer assets are not FTX property.
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FTX was once the second-largest cryptocurrency exchange.
Reuters contributed to this report.