As part of its ongoing recovery efforts, bankrupt crypto exchange FTX has launched a lawsuit against Crypto.com, seeking the return of $11 million allegedly held in an account linked to FTX’s sister company, Alameda Research.
FTX claims this account, registered under an alias associated with Alameda, was used to conceal trading activities and is now inaccessible due to Crypto.com’s refusal to release the funds.
The account, reportedly managed by Alameda through a shell or affiliate, was frozen by Crypto.com after Alameda’s collapse.
FTX administrators assert that despite providing court-approved documentation, Crypto.com has repeatedly denied access, citing mismatched account holder names as the reason.
FTX’s former executive, Caroline Ellison, has confirmed in an affidavit that Alameda always treated the funds in these accounts as company assets.
In response, FTX argues that the funds, valued at over $11 million as of the bankruptcy filing, are essential for creditor recovery and cannot be ignored.
FTX also points out that Crypto.com’s parent companies have filed claims exceeding $18 million against FTX, asserting that Crypto.com should not pursue its claims until releasing Alameda’s funds.
FTX’s legal move highlights the complex financial entanglements in the crypto world as exchanges like FTX seek to maximize recoveries for creditors.
The lawsuit also shows how intricate legal battles can become when trading firms rely on multiple accounts and shell companies, raising new questions about transparency in the industry. If successful, FTX’s suit could result in Crypto.com having to surrender the funds and cover legal fees.
