Dietrich Knauth
NEW YORK (Reuters) – FTX on Tuesday asked a U.S. judge to halt outside legal proceedings against company insiders and venture capital firms accused of involvement in the collapse of the failed cryptocurrency exchange, saying the lawsuits undermine FTX’s own efforts to repay customers.
The lawsuits, including class action lawsuits filed by FTX customers, could result in a recovery of about $16 billion that the company intends to pay to customers if it goes bankrupt, FTX said in court documents filed Tuesday in federal court in Miami.
The class action lawsuit recently resumed after being suspended during the criminal trial of FTX founder Sam Bankman-Fried. In March, he was sentenced to 25 years in prison for stealing from FTX clients and using their funds to back his risky investments.
According to FTX, plaintiffs in the class actions are seeking to take control of assets seized by federal prosecutors, challenge claims already pending by FTX, and collect 33% of attorneys’ fees for recoveries that class action lawyers played no role in obtaining. .
FTX said lawyers in the class action sought to pocket up to $400 million in legal fees “despite having provided virtually no monetary benefit to date” to FTX customers and other victims.
Adam Moskowitz, the plaintiffs’ lead lawyer, said he looked forward to U.S. Judge C. Michael Moore reviewing all of his clients’ settlements and pending claims, including a fraud claim filed against Sullivan & Cromwell, the law firm administering FTX’s bankruptcy.
“Our goal is to provide assistance to all victims of FTX, and we appreciate all parties who assist our efforts,” Moskowitz said.
FTX, which filed for bankruptcy in November 2022, recently announced that it will pay customers more than 100% of the amount they are owed – with the main caveat that it will evaluate customer claims based on much lower cryptocurrency prices from November 2022. when she filed for bankruptcy.
FTX has raised as much as $16 billion to pay off debts to clients by selling assets and filing lawsuits to recoup money paid to FTX before its collapse.
FTX said in a court filing Tuesday that the class action settlement threatens to invalidate the company’s lawsuits against insiders who pleaded guilty or were convicted of crimes, including Caroline Ellison, Gary Wang, Nishad Singh and Daniel Friedberg, and impede its operations. attempts to return funds from investment companies.