Alameda Research, the subsidiary of the bankrupt crypto exchange FTX, has initiated legal action against KuCoin to recover over $50 million in locked assets.
According to an Oct. 28 filing, the funds have been frozen by crypto exchange KuCoin since FTX’s collapse in November 2022. The complaint was filed in the United States Bankruptcy Court for the District of Delaware, the court handling FTX’s Chapter 11 case.
The filing claims that KuCoin has refused to release the assets despite several communications. The assets were originally valued at $28 million but now exceed $50 million due to market fluctuations. According to the document:
“KuCoin has without justification refused to turn over the assets in the Account to the Debtors, despite numerous requests.”
Alameda argues that KuCoin’s failure to release the assets constitutes a violation of the Bankruptcy Code, and the company seeks both the return of the funds and potential damages for the delays. The filing notes that the funds belong to the FTX estate and should be returned to creditors for repayment.
Cointelegraph reached out to KuCoin but has not received an immediate response.
Source: Kroll
Related: FTX customers could get $9B shortfall claim payout by mid-2024
The FTX bankruptcy estate recently settled a similar lawsuit against the Bybit exchange. According to an Oct. 24 filing, the agreement includes the withdrawal of $175 million in digital assets held on Bybit and the sale of nearly $53 million in BIT tokens to Mirana Corp — an investment division of the Bybit exchange. The settlement will add $228 million to FTX’s repayment efforts.
The bankrupted exchange originally filed a $1 billion lawsuit against Bybit and Mirana in November 2023, alleging that the entities used “VIP” access and a close relationship with FTX executives to withdraw roughly $327 million in digital assets and cash before the exchange’s collapse.
On Oct. 7, a US bankruptcy judge approved FTX’s liquidation plan, allowing the company to wind down its operations and begin repaying users.
The plan promises up to 119% of the claimed value for 98% of creditors. The repayment, however, is based on the value of assets when FTX collapsed in November 2022 — not at current market prices.
FTX was one of the leading crypto exchanges. It filed for bankruptcy in November 2022 following revelations of fraud. Alameda Research, its trading arm, has been at the center of many of the claims against FTX, with billions of dollars in customer funds reportedly misused.
Magazine: Deposit risk: What do crypto exchanges really do with your money?