Broken exchange FTX, Genesis Global and its non-bankrupt subsidiary GGC International Ltd. approximately $39 billion in cash and cryptocurrency sued to get it back. Genesis Globalis a digital asset lending company that filed for bankruptcy in New York last year.
Bankrupt Cryptocurrency Exchange FTX Sues Genesis For Its Claims
The lawsuit filed by FTX Group alleges that the company gave its customers $4.4 billion in cash and cryptocurrencies as collateral for loans, but only returned $500 million in assets when it filed for bankruptcy.
FTX Group alleges that Genesis and GGC International are using the remaining assets to trade and speculate in crypto, violating their contractual and fiduciary duties.
FTX Group requests a statement from the court that the full amount of the security, as well as interest and damages, is held in trust for FTX Group’s clients.
The lawsuit also highlights the risks in the digital asset lending industry, which has seen explosive growth in recent years as more investors want to borrow and lend cryptocurrencies.
Because there is little regulation, some industry experts have warned of potential risks and vulnerabilities in the industry, including the possibility of fraud and mismanagement.
Therefore, it is important for borrowers and lenders to carefully research and assess the risks involved before engaging in any digital asset lending transaction.
*Not investment advice.
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