A group of FTX users has filed a lawsuit and sought priority in repayment and damages in bankruptcy proceedings. The lawsuit alleges that FTX failed to properly safeguard its users’ assets and violated industry best practices, leading to significant financial losses for the plaintiffs.
The class action lawsuit has been filed in the same US Bankruptcy Court for the District of Delaware where FTX filed for Chapter 11 Bankruptcy protection last month.
According to the plaintiff, FTX failed to adequately protect its assets and violated its terms of service by allowing QuadrigaCX to use its platform to liquidate assets without proper oversight. As a result, the users lost significant amounts of money.
The lawsuit cites several instances in which FTX allegedly failed to protect its users’ assets, including the June 2021 hack of the exchange, in which $135 million worth of cryptocurrency was stolen. The plaintiffs argue that FTX’s inadequate security measures and lack of transparency allowed the hack to occur and that the exchange has not taken sufficient steps to compensate affected users.
In addition to seeking priority repayment and damages, the plaintiffs are also calling for an independent third party to be appointed to oversee the bankruptcy proceedings and ensure that the assets of FTX’s users are properly protected. They argue that the exchange’s management has demonstrated a lack of transparency and accountability and that an independent party is necessary to ensure a fair and just resolution to the bankruptcy proceedings.
The FTX bankruptcy has been a contentious and complicated matter, with many users alleging that the exchange has not been forthcoming about the extent of the losses and the steps it is taking to compensate affected users. The lawsuit adds another layer of complexity to the proceedings, and it remains to be seen how the case will ultimately be resolved.
Regardless of the outcome, the FTX bankruptcy serves as a reminder of the importance of choosing a reputable and secure cryptocurrency exchange, and the need for exchanges to prioritize the protection of their users’ assets.
