FTX US, FTX Trading, Alameda Research, and affiliated companies filed a lawsuit against the Bahamas-based FTX Digital Markets (FTX DM) for claiming it is the constructive owner of FTX.com’s entire property.
The filing says assertions of the joint provisional liquidators (JPLs) “continue to balloon in size and volume (though never attaining substance), with the JPLs making public statements…asserting that FTX DM is somehow the owner of the entire FTX.com exchange.”
The plaintiffs contend that JPLs have continued the jurisdictional dispute using the corporate shell that FTX founder Sam Bankman-Fried and his accomplices created to house their fraudulent business in the Bahamas.
Liquidators for FTX Digital Markets recently requested assistance from the Bahamas Supreme Court regarding which FTX entity should have control over the company’s assets.
They claimed that after moving the FTX.com headquarters from Hong Kong to the Bahamas, the Bahamian company assumed a more crucial hold on FTX.com.
A revision to the terms of service for FTX.com in May 2022 made it obvious that FTX planned to move existing foreign clients to FTX DM, according to the liquidators’ February court filing in the Bahamas.
In retaliation, the plaintiffs note in the lawsuit that under both the Original and New Terms of Service, neither FTX DM nor any other subsidiary exercised ownership or control over any asset on the FTX Trading platform.
The FTX debtors, now led by new CEO John J. Ray III claim in the lawsuit filed at the Delaware court that SBF and others didn’t have any authority to attempt to transfer the Plaintiffs’ property, to or through FTX DM.
They stated in the filing that FTX Digital Markets is an “economic nullity” within the FTX Group “created as a front to facilitate a conspiracy to defraud the Debtors’ customers.”
The team now asks the court to grant a declaratory judgment that FTX DM has no ownership interest in the debtors’ cryptocurrency, fiat currency, intellectual property, and customer information.
The FTX debtors team requests the court to release a “finding and order that any transfer or transfers of property or contractual rights to FTX DM are avoidable as fraudulent transfers.”
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