The FTX Recovery Trust has filed an adversary complaint in the U.S. Bankruptcy Court for the District of Delaware. It seeks to recover roughly $1.15 billion tied to Genesis Digital Assets (GDA). The Trust argues the money came from FTX.com customer deposits that were routed through Alameda Research during 2021–2022.
The suit names GDA and co-founders Rashit Makhat and Marco Krohn. According to the filing, the Trust received “far less than reasonably equivalent value” for the purchases. It says the deals involved inflated share prices and hundreds of millions paid directly to the founders. This newest FTX lawsuit underscores how recovery efforts are reaching beyond lenders into equity investments.
The clawback theory — and its hurdles
The complaint is built on a fraudulent transfer theory under bankruptcy law and Delaware’s Uniform Fraudulent Transfer Act. The Recovery Trust says misappropriated FTX customer funds were used to buy overvalued equity and founder shares.
It argues these transactions are avoidable and recoverable for the estate. A win would expand the pool of funds available for FTX creditor recoveries. Still, the Trust must prove the transfers meet legal standards for fraud. The adversary proceeding in Delaware bankruptcy court will test whether the defendants can rely on good faith and value defenses to shield the transfers.
Flow of funds and “ignored red flags”
The complaint says Sam Bankman-Fried directed Alameda Research to buy into GDA even as FTX and Alameda were insolvent. The Trust claims it paid “off-market” prices at a time when Kazakhstan’s energy shortages and delays in U.S. buildouts created major risks for the miner.
It also points to unaudited financials and other diligence gaps. In total, the Trust says $550.9 million went directly to the co-founders, allowing them to cash out while FTX customer funds were at risk.
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Kazakhstan’s energy crunch and mining risk
One of the central risks was Kazakhstan’s fragile power grid. After China banned crypto mining in 2021, thousands of miners relocated to Kazakhstan. The sudden demand strained the national grid, causing electricity shortages and government-imposed mining curtailments.
Because GDA ran a large share of its operations in the country, it was deeply exposed to these risks. The government even introduced higher tariffs for miners and considered limiting new projects.
The lawsuit argues that these well-publicized problems in Kazakhstan’s Bitcoin mining industry should have reduced GDA’s valuation. Instead, FTX’s funds — funneled through Alameda Research — were used to buy shares at premium prices, ignoring the energy risks that undermined the miner’s business model. That makes the investments look even more reckless in hindsight.
How it differs from the Genesis Global settlement
In 2023, the court approved a $175 million settlement between FTX and Genesis Global Trading, a separate DCG affiliate. That case dealt with lending exposures.
This new lawsuit targets Genesis Digital Assets, the Bitcoin miner. The dispute focuses on equity investment decisions rather than intercompany lending. It makes the case as much about SBF’s investment choices as about clawing back estate assets.
What it could mean for creditors
The FTX Recovery Trust has already started distributions, with more scheduled later this year. A successful recovery against GDA would increase funds available for FTX creditors.
But adversary proceedings can be slow. If the case drags on, legal costs could rise, and creditor timelines could stretch. For now, creditors have another possible source of recovery as the Delaware bankruptcy court begins setting deadlines.
>>> Read more: FTX Freezes $500M in Creditor Payouts Across 49 Jurisdictions
Why miners and investors should watch
Beyond the immediate recovery push, the lawsuit raises questions about miner valuations. The filing’s language about “insane” prices and overlooked risks could cool the secondary market for miner shares.
Future equity rounds may require tighter terms, audited financials, and greater scrutiny of energy supply risks. If the Trust succeeds, miners and their investors may face a new normal in financing conditions.
Readers’ frequently asked questions
What is an adversary proceeding in bankruptcy court?
An adversary proceeding is a separate lawsuit filed within a bankruptcy case. It allows the bankruptcy estate to pursue claims such as clawbacks, fraudulent transfers, or contract disputes. These cases follow standard litigation procedures but are overseen by the bankruptcy judge.
How are clawback lawsuits typically resolved in U.S. bankruptcy cases?
Clawback suits can end through settlement, dismissal, or trial. In many high-profile bankruptcies, settlements are common because they reduce legal costs and accelerate distributions to creditors. However, if no agreement is reached, the court decides whether the transfers must be returned.
What happens if Genesis Digital Assets cannot repay the claimed amount?
If the court rules in favor of the FTX Recovery Trust but Genesis Digital Assets lacks the funds to cover the judgment, the estate may pursue asset sales, restructuring, or negotiate partial settlements. Creditors could still receive less than the full claim depending on what is recoverable.
What Is In It For You? Action items you might want to consider
Monitor court filings in Delaware
Track updates on the adversary proceeding docket to see whether Genesis Digital Assets contests the clawback claims or pursues an early settlement.
Reassess exposure to miner equities
If you hold or are considering investments in Bitcoin mining firms, review their regional energy dependencies and financing terms. The case highlights how operational risks can directly affect valuations.
Follow creditor distribution updates
Keep an eye on FTX creditor communications. Any recovery from Genesis Digital Assets could affect payout schedules and percentages for claimants.
