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FTX files lawsuits against NFT Stars and Kurosemi Inc. for failing to deliver tokens as per agreements, part of asset recovery efforts.
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FTX escalates legal actions to recover assets for creditor payouts, warning of more lawsuits against uncooperative token issuers.
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The bankrupt exchange is set to begin its second round of fund distributions to creditors in May 2025, following prior payments.
FTX initiates lawsuits against NFT companies to recover funds for creditors; more legal actions are anticipated to ensure asset recovery.
FTX Initiates Legal Action to Recover Assets
According to the latest press release, the exchange attempted non-litigation negotiations with both entities multiple times. Nonetheless, these efforts were unsuccessful.
In addition to the current legal actions, FTX revealed that it is also engaging with several other token issuers to recover assets. The company added that further lawsuits will be filed against those who fail to cooperate.
“We urge token and coin issuers to return assets that rightfully belong to FTX, and are willing to initiate litigation barring adequate engagement. Our team continues to work tirelessly to maximize recoveries for the FTX Estate and return funds to creditors, including by filing two complaints against issuers who have repeatedly ignored our attempts to engage,” The FTX Estate’s statement read.
The lawsuits mark a significant escalation in FTX’s strategy to reclaim assets following its bankruptcy filing in November 2022. A liquidity crisis and the revelation of an $8 billion shortfall in its accounts triggered the exchange’s collapse.
On February 18, 2025, FTX started its initial distributions of recovered funds to holders of approved claims in FTX’s Convenience Class. FTX also announced that the next distribution record date will be April 11, with payments expected to begin on May 30.
This second round of payments will include Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and additional Convenience Claims approved since the initial record date. This distribution is part of a broader plan to repay creditors.
Last month, FTX suffered another setback as Three Arrows Capital’s (3AC) claim was raised from $120 million to $1.5 billion. The amendment followed new findings about 3AC’s extensive dealings with FTX. It was approved despite objections from FTX.
Meanwhile, FTX’s collapse serves as a reminder of the systemic risks in the crypto industry. To avoid similar situations, US Senators have proposed the PROOF Act earlier this month.
The bill mandates that crypto exchanges keep customer funds separate from institutional assets. It also requires exchanges to submit monthly audits, called “Proof of Reserves,” conducted by neutral third-party firms. This aims to ensure transparency, verify asset availability, and enhance consumer protection.
Conclusion
In conclusion, FTX’s legal actions serve to underscore the importance of compliance and transparency in the cryptocurrency space. These developments signal a commitment to asset recovery amidst significant challenges. Stakeholders should remain vigilant as these proceedings unfold, ensuring that the lessons learned from FTX’s collapse are not forgotten.
