The bankrupt crypto exchange FTX has initiated legal action against NFT Stars, a non-fungible token marketplace, and Kurosemi, the blockchain gaming company behind Delysium. The lawsuits aim to recover tokens that FTX claims are rightfully theirs.
Filed in Delaware bankruptcy court, the lawsuits accuse NFT Stars and Delysium of failing to deliver tokens that FTX had already paid for. FTX claims that despite numerous attempts to resolve the issue amicably, the firms have not fulfilled their obligations.
In an April 28 statement, FTX stated they had made multiple unanswered attempts to engage with both firms. They also warned that they would contact numerous other token and coin issuers regarding FTX assets and would file additional suits against non-responsive parties.
Details of the Lawsuits
The lawsuit against Delysium centers on a $1 million payment made by Alameda Research, FTX’s now-defunct trading arm, in January 2022. This payment was for 75 million AGI tokens. The initial token launch was in April 2023. Alameda Research was supposed to receive 20% of the tokens after 12 months. However, this timeframe was extended to 48 months and then halted altogether because of FTX’s bankruptcy in November 2022.
Regarding NFT Stars, FTX alleges a $325,000 payment in November 2021 for 1.35 million SENATE tokens and 135 million SIDUS tokens. After a partial delivery, NFT Stars stopped delivering the remaining 831,000 SENATE tokens and 83 million SIDUS tokens, citing the bankruptcy proceedings.
FTX Seeks Token Recovery and Damages
FTX is requesting the court to mandate the delivery of the remaining tokens. FTX wants also monetary damages, arguing that the tokens reached a peak value and could have been sold for a profit if delivered on time.
AGI, Delysium’s token, peaked at $0.672 in May 2024 but has since declined significantly. SENATE and SIDUS tokens also experienced significant drops in value after reaching highs in January 2022.
Background on FTX’s Recovery Efforts
These lawsuits are part of FTX’s broader effort to recover funds owed to the collapsed exchange. FTX is in the process of identifying and recouping assets to repay creditors and investors impacted by the company’s downfall.
In November of the previous year, FTX initiated a series of lawsuits, including one against SkyBridge Capital and its founder, Anthony Scaramucci, to recover funds used by former FTX CEO Sam Bankman-Fried for sponsorship and investment deals. Additionally, a suit was filed against crypto exchange Binance and its former CEO, Changpeng Zhao, seeking $1.76 billion in cryptocurrency related to a repurchase agreement.
Key Takeaways
- FTX is suing NFT Stars and Delysium to recover unpaid tokens.
- The lawsuits allege breach of contract and seek monetary damages.
- FTX is actively pursuing various legal avenues to recoup funds for creditors.
- This legal action is part of the ongoing bankruptcy proceedings following FTX’s collapse.
Understanding the Implications
The lawsuits highlight the complexities of token ownership and obligations in the cryptocurrency space, particularly during bankruptcy proceedings. The outcome of these cases could set precedents for how token deliveries are handled when companies face financial difficulties. Moreover, it demonstrates the aggressive approach FTX is taking to recover assets, even from relatively smaller claims.
More about FTX Bankruptcy
The FTX bankruptcy, one of the largest in the cryptocurrency industry, has had a ripple effect throughout the market. The company’s rapid collapse revealed significant mismanagement and alleged fraud, leading to criminal charges against its founder, Sam Bankman-Fried. The bankruptcy proceedings are ongoing, with creditors and investors seeking to recover billions of dollars in losses. The recovery efforts involve a complex web of legal actions, asset tracing, and negotiations.
The current lawsuits are not the first ones to appear. Many companies and figures are being sued for some kind of relation to the company, in order to return the assets that FTX owns to creditors.
