FTX Trust Sues Genesis Digital to Recover $1.15B in Fraudulent Transfers

FTX Trust has launched a lawsuit against Genesis Digital, a former partner of the collapsed FTX exchange, seeking to recover $1.15 billion in allegedly fraudulent transfers. The claim argues that these transactions, directed by former CEO Sam Bankman-Fried, benefited his personal interests while harming FTX creditors.

The filing alleges Bankman-Fried used commingled funds from Alameda Research to buy inflated stakes in Genesis Digital Assets, a Bitcoin mining company. According to the Trust, these investments were reckless and among the most damaging decisions made before FTX’s bankruptcy. Notably, Bankman-Fried resigned from Genesis’ board just one day before FTX filed for bankruptcy in November 2022.

The lawsuit is part of FTX Trust’s broader strategy to claw back funds for creditor reimbursement. In August, the Trust filed a similar lawsuit against Binance, seeking $1.76 billion. Former Binance CEO Changpeng “CZ” Zhao has asked the U.S. bankruptcy court to dismiss that case.

While Genesis Digital has faced scrutiny from U.S. authorities, the outcome of FTX Trust’s civil case remains uncertain. The court will need to determine whether Bankman-Fried’s board position and financial decisions can be deemed fraudulent and thus reversible. Although Bankman-Fried is already serving prison time for multiple fraud charges, the Trust is attempting to unwind deals he executed to maximize creditor recovery.

These lawsuits highlight the Trust’s aggressive pursuit of lost assets amid one of crypto’s most notorious collapses. However, the success of these legal efforts is far from guaranteed, leaving creditors and the broader crypto community watching closely for how the courts respond.