George Miller
FTX, a crypto exchange now in bankruptcy and established by Sam Bankman-Fried, has initiated a lawsuit to recover over $11 million associated with its related entity, Alameda Research, from a Crypto.com account. This legal action, taken on November 8, claims that the funds are kept in an account under the name of Ka Yu Tin, also known as Nicole Tin, who FTX states served as a proxy for Alameda.
Details of FTX’s Legal Action Against Crypto.Com
The filing reveals that Alameda Research routinely utilized pseudonyms or opened accounts in employees’ names before its bankruptcy, a strategy FTX claims was designed to conceal trading operations. The lawsuit argues that even though the account is registered in Tin’s name, Alameda was responsible for the funding and management of that account, indicating that they retained control over the funds.
After Alameda’s downfall, Crypto.com reportedly froze the account, preventing FTX’s administrators from accessing the funds. FTX asserts that Crypto.com has continuously rejected their retrieval requests, alleging discrepancies between the name on the account and those trying to claim the funds.
Consequently, FTX maintains that it has supplied adequate documentation and resolved any issues related to the case but finds Crypto.com uncooperative in the process.
Caroline Ellison, the former CEO of Alameda Research, provided an affidavit that backs FTX’s claims. She confirmed that Crypto.com accounts were indeed established under Alameda’s affiliates or individuals connected to the firm.
Ellison emphasized that Alameda considered the assets in these accounts as belonging to the company. She stated, “the assets in the Alameda Account, valued at approximately $11.4 million as of the Petition Date, are not of inconsequential value or benefit to the estate and must be returned to the Debtors.”
Efforts to Recover Assets
To enhance its recovery strategy, the bankrupt entity is also pursuing claims related to businesses connected to Crypto.com’s parent companies, Foris MT and Iron Block. These companies previously filed claims against FTX for $18.4 million and $237,800, funds that were on the FTX platform before its collapse. FTX is requesting that Crypto.com’s claims be postponed until the $11 million tied to Alameda’s assets on Crypto.com is returned.
The exchange seeks a judicial resolution to secure the return of the contested funds, along with additional forms of relief, including coverage for legal costs. This lawsuit highlights FTX’s ongoing commitment to maximizing asset recovery during its bankruptcy proceedings.
In related developments, Gary Wang, a co-founder of the disgraced exchange, has requested to avoid prison time, citing his cooperation in the conviction of Bankman-Fried. Meanwhile, Ellison has started serving her two-year sentence and has also forfeited $11 billion as per the court’s orders.