In March 2023, legal teams representing FTX US and Alameda Research filed a complaint against FTX Digital Markets, a Bahamas-based company, alleging that it was a fraudulent enterprise used to obscure the question of the firm’s ownership. The complaint was filed with the United States Bankruptcy Court for the District of Delaware, where FTX debtors stated that FTX Digital Markets, also known as FTX DM, and the joint provisional liquidators had claimed that the Bahamian arm was the “constructive owner” of FTX.com’s fiat and crypto assets, as well as other intellectual property.
The legal teams claim that these claims made by FTX DM are baseless and will harm FTX.com customers and all other creditors of the FTX Debtors as the company continues with bankruptcy proceedings in the United States. The filing states that the JPLs’ claim to ownership of FTX.com’s property is based mainly on constructive, equitable, and other non-documentary arguments that depend upon the false premise that FTX DM was the center of the FTX Group. The filing further states that FTX DM was only a short-lived provider of limited “match-making” services for customer-to-customer transactions on the cryptocurrency exchange built, owned, and operated by Debtor FTX Trading, its immediate corporate parent.
The complaint filed by FTX US and Alameda Research asserts that FTX DM was a shell entity used to conceal the issue of the firm’s ownership, and its claims to ownership of FTX.com’s property are unfounded. The legal teams claim that FTX DM was not the center of the FTX Group, as the company only provided limited match-making services for customer-to-customer transactions. The filing also asserts that FTX DM’s claims to ownership will harm FTX.com customers and all other creditors of the FTX Debtors as the company continues with bankruptcy proceedings in the United States.
The legal battle between FTX US, Alameda Research, and FTX Digital Markets is ongoing, and it remains to be seen how the bankruptcy court will rule in this case. However, the complaint filed by FTX US and Alameda Research raises serious questions about the ownership of FTX.com’s assets and the claims made by FTX DM. It is likely that this case will have significant implications for the cryptocurrency industry, as it highlights the importance of transparency and accountability in the sector.