Alameda Research, the subsidiary of the bankrupt FTX crypto exchange, has initiated legal action against KuCoin in order to recover over $50 million in locked assets.
The funds have been frozen by crypto exchange KuCoin since FTX’s collapse in November 2022, according to a filing from October 28. The complaint was submitted to the United States Bankruptcy Court for the District of Delaware, responsible for the Chapter 11 case of FTX.
FTX Crypto Exchange Files Lawsuit Against Kucoin
Despite numerous communications, the filing alleges that KuCoin has declined to relinquish the assets. The assets were initially assessed at $28 million; however, market fluctuations have resulted in a value that surpasses $50 million. By the document:
“KuCoin has without justification refused to turn over the assets in the Account to the Debtors, despite numerous requests.”
Alameda contends that KuCoin’s failure to release the assets violates the Bankruptcy Code. The company is seeking the return of the funds and potential damages for the delays. The filing indicates that the funds are the property of the FTX crypto exchange and should be returned to creditors for repayment.
KuCoin has yet to respond to Cointelegraph’s inquiry.
The bankrupt FTX crypto exchange recently resolved comparable litigation against the Bybit exchange. By an October 24 filing, the agreement comprises the transfer of nearly $53 million in BIT tokens to Mirana Corp, an investment division of the Bybit exchange, and the withdrawal of $175 million in digital assets held on Bybit. Due to the settlement, FTX’s repayment endeavors will be augmented by $228 million.
The exchange that went insolvent in November 2023 initially filed a $1 billion lawsuit against Bybit and Mirana. The lawsuit alleged that the entities had used “VIP” access and a close relationship with FTX executives to withdraw approximately $327 million in digital assets and cash before the exchange’s collapse.
On October 7, a bankruptcy judge in the United States approved FTX’s liquidation plan, which enabled the company to cease operations and commence user repayments.
The plan guarantees that 98% of creditors will receive up to 119% of the claimed value. Nevertheless, the repayment is determined by the value of assets at the time of FTX’s collapse in November 2022 rather than current market prices.
FTX was a prominent cryptocurrency exchange. In November 2022, it declared bankruptcy as a result of fraudulent activities. Alameda Research, its trading subsidiary, has been the focal point of allegations against FTX crypto exchange, including misappropriating billions of dollars in customer funds.
