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As first reported by Cointelegraph, the FTX Recovery Trust has filed a new lawsuit in Delaware bankruptcy court aimed at clawing back more than $1 billion tied to investments in Genesis Digital Assets. The case adds another chapter to the long-running fallout from the collapse of Sam Bankman-Fried’s crypto empire.
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The filing accuses Bankman-Fried of directing FTX funds through Alameda Research into overpriced GDA shares between 2021 and 2022. More than $500 million went into 154 preferred shares, while another $550.9 million was allegedly wired directly to the company’s co-founders.
“By 2021, Bankman-Fried had already caused billions of dollars of customer funds to be diverted from the FTX.com exchange to Alameda,” the filing noted. It also claimed he sought to capture the upside for himself while leaving creditors exposed to losses.
At the time of the deals, Genesis Digital was operating out of Kazakhstan, a country experiencing energy shortages that directly impacted mining operations. According to the complaint, Bankman-Fried overlooked “red flags” and relied on misleading financial documents that “bore no relation to reality.”
The lawsuit argues these transfers weren’t sound investments but transactions meant to benefit SBF personally as the 90% owner of Alameda.
FTX entered bankruptcy in late 2022, and former executives—including Bankman-Fried—are now serving prison time. Since then, the Recovery Trust has struck settlements, including a $175 million agreement with Genesis Global Trading in 2023 (a separate company from Genesis Digital).
The estate began repayments earlier this year, with $1.2 billion distributed in February, another $5 billion in May, and $1.6 billion expected on Sept. 30. A victory in the Genesis Digital lawsuit could add even more funds for those still waiting.