FTX Bankruptcy Case Continues to Escalate, Files Lawsuit against KuCoin for Violation of Bankruptcy Laws
On October 28th, FTX officially filed a lawsuit against cryptocurrency exchange KuCoin, accusing them of violating bankruptcy laws and demanding the release of $28 million worth of frozen cryptocurrency assets held by KuCoin since FTX’s collapse in 2022. With the market fluctuations, these assets have now appreciated to over $50 million.
FTX’s Dispute with KuCoin After Bankruptcy, from $28 Million to $50 Million
Since FTX’s closure in November 2022, trading institution Alameda Research has been attempting to recover assets held in various major cryptocurrency exchanges, including KuCoin. When KuCoin sensed trouble, they immediately froze FTX’s $28 million assets. With the changing market prices, the $28 million has now increased to a substantial amount exceeding $50 million.
KuCoin Claims Suspicious Account Activity, Freezes Assets Immediately
KuCoin responded to this by stating that the reason for freezing the assets was due to “detecting suspicious activity” and that they had made multiple attempts to contact the account holder to resolve the issue but received no response. Therefore, KuCoin declared that they would “strictly follow the instructions of law enforcement agencies to ensure that user assets are not misappropriated.”
Escalating Situation, Alameda Accuses KuCoin of Illegally Refusing to Return Assets
On October 28th of this year, Alameda Research officially filed a lawsuit against KuCoin in the Bankruptcy Court of Delaware, USA, citing “KuCoin’s violation of bankruptcy laws” and demanding the return of the frozen $28 million assets. The lawsuit explicitly stated that KuCoin had repeatedly and without cause refused to return the assets and requested immediate return as well as compensation for delayed losses. Alameda emphasized that this fund belongs to the “FTX bankruptcy reorganization fund” and must be used to repay creditors.
FTX Successfully Recovers Funds from Bybit, Adds $228 Million in Capital
As previously reported, the FTX bankruptcy reorganization team recently reached a settlement agreement with cryptocurrency exchange Bybit for a staggering $228 million. This settlement agreement allows FTX to withdraw $175 million worth of digital assets from Bybit and sell approximately $53 million worth of BIT tokens to Mirana Corp (Bybit’s investment division).
However, the settlement agreement still requires approval from the federal court and a hearing is scheduled for November 20th at 2 PM Eastern Time to approve the agreement. If approved, this settlement fund will be used to repay former users and creditors of FTX.
(Bankruptcy Court Approves! FTX to Return 119% of Claimed Amount within 60 Days)