FTX is escalating its legal efforts. In an attempt to recover missing billions in digital assets, the FTX estate and FTX Recovery Trust have sued two crypto companies that allegedly have tokens that they were supposed to relinquish in contractual agreements prior to the firm’s downfall. This litigation indicates that the company is entering a more aggressive stage in the attempts to recover funds for the economy.
The lawsuits filed against NFT Stars Ltd. and Kurosemi Inc., who are the developers of the Delysium project, accuse the companies of nonperformance in delivering digital tokens as per the jurisdictional requirements. Recovery teams for the estate have been stern in their approaches, stating that entitled assets will be recaptured. “We will initiate further litigation if needed.”
According to statements made by FTX, the company offered to resolve the conflicts once or twice, but there was no other option. FTX’s claims express the frustration of unsuccessful negotiations after attempting multiple times to settle outside of court. The documents suggest that these companies deliberately disregard signaled requests to retake tokens they feel should be strung to the estate’s treasure chest.
From Silence to Subpoenas: Legal Action Increases
As reported, the estate has spent a year negotiating with several counterparties and crypto projects to recover assets and missing funds. However, with billions still pending since the FTX disaster in November 2022, the estate will be changing its tune and attempting to retrieve the funds through legal battles. This legal action regarding the proceeding against NFT Stars and Kurosemi is most probably the first of many steps. In the eyes of the estate, additional token issuers have already been reached and there will be several more legal actions to follow if more help is not provided.
Rare Rigel from the Mynth NFT team spoke on the topic and the dispute itself, bringing attention to the NFT space. “The lawsuits reflect the complexities in the NFT space and the importance of contractual clarity,” Rigel stated. Thus far, neither of the parties involved has provided a public response to the accusations brought against them.
$16 Billion in Repayments Results Mark Progress for Creditors
While intensifying certain legal proceedings, FTX also seems to be progressing with a restitution plan for customers and creditors. The estate is preparing to launch its second phase of restructuring reorganization payouts, which has an approximate $16 billion budget. This plan was sanctioned in late 2024 and it stands out as one of the biggest bankruptcy repayment plans in relation to the crypto sector.
According to the plan, 98% of approved creditors will receive up to 119% of their allowed claim. This figure also encompasses retail as well as bigger institutional customers. This group is expected to receive the next payment on May 30, alongside customer claims and general unsecured claims that are still pending. Creditors with claims of less than 50,000 US dollars, labeled under the ‘Convenience Class,’ have started receiving all their repayments together with 9% interest, as stated by the estate.
The repayment initiative for the FTX has been assigned to John Ray III, the FTX CEO and restructuring expert who has captured the company in its collapse. Ranging from $14.5 billion to $16.3 billion, the assets managed by Ray and his team since November 2022 are composed of diverse assets, including cash, crypto, and equity stakes in active companies.
Multifaceted Approach: Litigation and Liquidation
FTX, a prominent cryptocurrency trading platform, is focusing on litigation and liquidation to enhance brand recovery and mitigate operational costs. The company’s estate aims to recover value from bypassed projects, using investment, financial, and securities law frameworks. FTX’s aggressive approach to lawsuits may guide other distressed crypto firms in recovery and reclaiming value during future industry downturns. The legally controlled “FTX Estate” framework serves as a battleground for determining principles of legal crypto distribution.
