FTX Recovery Trust Demands $1.15B from Genesis Digital Assets in Blockbuster Lawsuit

FTX's cleanup crew just dropped a billion-dollar bomb on Genesis Digital Assets.

The Legal Reckoning

FTX's recovery trust isn't playing nice—they're coming after Genesis Digital Assets for every last satoshi of that $1.15 billion. This isn't some polite request; it's a full-scale legal assault that shows just how messy crypto's collapse continues to be.

Numbers Don't Lie

When you're talking about $1.15 billion, this isn't pocket change—even by crypto standards. That amount could fund entire blockchain ecosystems or bail out several mid-tier exchanges. Yet here we are, watching one bankrupt entity try to claw back funds from another.

The Irony of Crypto Finance

Nothing says 'decentralized future' like traditional lawyers fighting over billions in bankruptcy court—the ultimate proof that when things go south, everyone runs back to the very system crypto promised to replace.

This lawsuit proves that crypto's cleanup phase has more twists than a Bitcoin price chart—and the industry's growing pains are far from over.

Sam Bankman-Fried finds himself in trouble again with a scam scandal 

Concerning the FTX Recovery Trust’s complaint, Sam Bankman-Fried had ordered FTX’s sister cryptocurrency trading firm, Alameda Research, headed by CEO Caroline Ellison, to purchase GDA shares at very high prices exceeding  $500 million for just 154 preferred shares.

Apart from this, reliable sources also revealed that the CEO purchased shares of GDA for around $550.9 million after he directly sent money to Rashit Makhat and Marco Krohn, the Co-Founders at GDA.

Following the situation, the filing highlighted that by 2021, Bankman-Fried had successfully transferred billions of dollars in customer funds from  FTX.com exchange to Alameda. During this act, the CEO made Alameda spend more than  $1.15 billion on expensive GDA shares despite escalating debt to FTX.com.

On the other hand, the complaint highlighted that the transfers were purposefully meant to benefit Bankman-Fried personally.

For the 90% owner of Alameda, his share of the act was nearly all the profits from GDA’s inflated value and potential success (for both GDA and Bitcoin). He was supposed to pass losses onto the FTX Group’s creditors and customers to achieve this.

The FTX Recovery Trust aims to recover funds as a result of Bankman-Fried’s actions 

The lawsuit against Genesis Digital followed the FTX Recovery Trust’s efforts to regain funds connected to the collapse of the exchange. FTX filed for bankruptcy in 2022, and several former executives, such as Bankman-Fried, are currently in prison.

Bankman-Fried’s imprisonment came after he ignored obvious warning signs and believed in lies while investing in Genesis Digital. At that time, the company in Kazakhstan experienced an energy crisis. It also offered Bankman-Fried false financial documents.

In the meantime, a bankruptcy court approved a $175 million settlement in 2023 in which Genesis Global Trading — which has no relationship to GDA — agreed to pay FTX.

After over two years in bankruptcy court, the FTX Recovery Trust began paying out creditors in February. The plan began with a $1.2 billion payout to claimants and another $5 billion distribution in May. It is due to release $1.6 billion to creditors on September 30.

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