The administrators overseeing the FTX bankruptcy have initiated legal action against two crypto-focused firms, NFT Stars Limited and KUROSEMI INC., the entity behind the Delysium gaming platform. The lawsuits allege failure to transfer digital tokens owed to the FTX estate.
Announced via a press release on April 28th, the complaints were lodged in a Delaware bankruptcy court. FTX claims both companies breached agreements by withholding crypto assets deemed vital for the ongoing creditor recovery process. The estate noted that litigation followed unsuccessful attempts to resolve the matter directly with NFT Stars and Delysium.
“We urge token and coin issuers to return assets that rightfully belong to FTX,” stated the estate, emphasizing the commitment to maximizing creditor returns. “Our team continues to work tirelessly to maximize recoveries for the FTX Estate and return funds to creditors.”
[(1/3) FTX today announced that to recover estate assets, FTX has commenced legal action against certain token and coin issuers which own FTX assets and have been unwilling to engage.]
Spearheaded by law firm Sullivan & Cromwell LLP, FTX’s legal team signaled that further lawsuits could target other uncooperative token issuers. This legal pressure forms part of a comprehensive strategy to reclaim assets, involving proactive outreach to various crypto projects holding funds tied to the collapsed exchange.
Recovering diverse crypto assets, even those associated with smaller or niche projects like NFTs and gaming tokens, is essential as FTX progresses with its ambitious repayment plan. This development coincides with preparations for the second phase of creditor distributions, scheduled to commence on May 30th. An earlier court-approved plan from October 2024 targets repaying 98% of creditors up to 119% of their approved claim amounts.
The second distribution wave covers Customer Entitlement Claims and General Unsecured Claims, marking a significant step in the bankruptcy proceedings that began after FTX’s dramatic failure in November 2022. The collapse was triggered by the discovery that founder Sam Bankman-Fried had misappropriated $8 billion in customer funds.
Under the direction of CEO John Ray III, the FTX estate has already secured between $14.5 billion and $16.3 billion. The success of these latest lawsuits against NFT Stars and Delysium could further bolster the funds available for distribution, moving one of the largest crypto bankruptcy cases closer to resolution.