Alameda Research has filed a lawsuit against KuCoin to recover over $50 million in locked assets for FTX’s debtors.
The lawsuit has been filed in the United States Bankruptcy Court for the District of Delaware, the same court where FTX filed for its bankruptcy proceedings.
FTX Debtors Frustrated Over KuCoin Relunctancy to Release the Funds
The lawsuit argues that KuCoin’s refusal to release these assets violates the US Bankruptcy Code. Since FTX’s collapse in November 2022, KuCoin has frozen access to the funds, initially valued at $28 million.
However, due to market fluctuations, the assets have since appreciated, now exceeding $50 million in worth.
Read More: FTX Collapse Explained – How Sam Bankman-Fried’s Empire Fell
According to the court filing on October 28, Alameda asserts that it has made several attempts to communicate with KuCoin, requesting the release of these assets. The funds in question are part of the FTX estate, and their return would contribute to paying back FTX’s creditors.
Despite multiple efforts, KuCoin has yet to respond publicly or act on these requests. The claim against KuCoin includes demands for the assets’ return and compensation for delays.
“On November 16, 2022, the now-CEO of the Debtors sent a letter to KuCoin’s CEO, copying KuCoin’s legal team, requesting that the assets in the Account be secured and seeking to coordinate the transfer of the assets in the Account to the Debtors. Despite repeated follow-ups from the Debtors over the next two months, including through outreach to numerous other KuCoin departments, KuCoin continued to ignore the Debtors’ requests,” as stated in the 22nd clause of the lawsuit.
The bankrupt estate claims that KuCoin’s actions have prolonged the fallout from FTX’s collapse.
Repayment Efforts Continue
This lawsuit against KuCoin comes on the heels of another significant development in FTX’s recovery efforts. On October 24, the estate reached a settlement with the crypto exchange Bybit, agreeing to dismiss its lawsuit.
In return, FTX secured up to $175 million in asset recovery and reached a deal to sell BIT tokens to Bybit’s investment arm, Mirana, for over $50 million.
Earlier this month, the bankrupt exchange’s restructuring plan received court approval. The approved plan allows FTX to proceed with asset recovery efforts, with projections estimating more than $16 billion could be available for repayment.
In line with this, the estate currently holds over $1 billion in Solana as part of ongoing liquidation. Last week, Alameda redeemed 178,631 SOL tokens valued at approximately $128 million.
Read More: Who Is Sam Bankman-Fried (SBF), the Infamous FTX Co-Founder?
Amidst these efforts, the fallout from the FTX collapse continues to unfold. Earlier this month, Alameda’s former CEO, Caroline Ellison, was sentenced to two years in prison.
Even though she was a key conspirator behind the fraud, Ellison received a reduced sentence due to her testimony against Sam Bankman-Fried. The FTX founder and former CEO is currently serving 25 years in prison on multiple charges of fraud and money laundering.
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