TLDR
- FTX Recovery Trust filed lawsuit against Genesis Digital Assets seeking $1.15 billion in allegedly misappropriated customer funds
- Sam Bankman-Fried allegedly directed investments through Alameda Research at “insane” valuations despite red flags about the Bitcoin mining company
- Over half of the funds went directly to Genesis Digital co-founders Rashit Makhat and Marco Krohn between 2021-2022
- The lawsuit adds to ongoing clawback efforts as FTX has already distributed $6.2 billion to creditors this year
- Case filed in Delaware Bankruptcy Court under Judge Karen B. Owens on September 22, 2025
The FTX Recovery Trust has launched a major legal battle against Bitcoin mining company Genesis Digital Assets, seeking to recover $1.15 billion in customer funds allegedly stolen during the exchange’s collapse. The lawsuit, filed September 22 in Delaware Bankruptcy Court, targets Genesis Digital Assets Ltd. and its co-founders for their role in what prosecutors call a massive fraud scheme.
Court documents reveal that former FTX CEO Sam Bankman-Fried directed over $1.15 billion in customer deposits to Genesis Digital through his trading firm Alameda Research. More than $550 million went directly to the company’s co-founders, Rashit Makhat and Marco Krohn, while another $500 million purchased overpriced preferred shares.
The transfers occurred during 2021 and 2022 when Alameda Research already owed billions to FTX customers. Internal communications cited in the lawsuit describe the investment valuations as “insane and off-market,” suggesting Bankman-Fried ignored obvious warning signs about the Bitcoin mining operation.
Red Flags Ignored During Investment Process
Genesis Digital Assets faced multiple operational challenges that should have deterred investment, according to the complaint. The company operated primarily in Kazakhstan during an ongoing energy crisis that threatened mining operations. Financial documents provided to Alameda allegedly “bore no relation to reality.”
The lawsuit claims Sam Bankman-Fried proceeded despite concerns about unbuilt US data centers and questionable business prospects. As the 90% owner of Alameda Research, he stood to benefit personally from any investment gains while customers absorbed all potential losses.
The FTX Recovery Trust argues these transfers constituted both actual and constructive fraud under federal bankruptcy law and Delaware’s Uniform Fraudulent Transfer Act. The complaint seeks full recovery of the $1.15 billion plus interest and legal fees.
Progress in Customer Fund Recovery
This lawsuit represents the latest effort in FTX’s complex bankruptcy proceedings that began after the exchange’s November 2022 collapse. The recovery trust has already achieved success in returning funds to affected customers and creditors.
The trust distributed $1.2 billion to claimants in February 2025, followed by a larger $5 billion payout in May. Another $1.6 billion distribution is scheduled for September 30, bringing total recoveries to over $7.8 billion.
Previous legal actions have also yielded results, including a $175 million settlement with Genesis Global Trading in 2023. The current Genesis Digital Assets case involves a separate company despite the similar name.
The lawsuit adds Genesis Digital Assets to a growing list of companies facing clawback demands from the FTX estate. Legal experts expect the case to face strong opposition given the large amounts at stake and complex international ownership structures involved.
