FTX has initiated legal action against certain token and coin issuers, including NFT Stars Limited and KUROSEMI INC. (operating as Delysium), for failing to deliver contractually obligated tokens and refusing to cooperate in returning assets owed to the FTX estate. These lawsuits, announced on April 29, 2025, are part of FTX’s efforts to recover assets to repay customers affected by the exchange’s collapse in November 2022.
The complaints follow multiple unsuccessful attempts to resolve the issue without litigation, and FTX has warned that additional lawsuits will be filed against other non-responsive token issuers. The FTX Recovery Trust is actively pursuing these actions to maximize asset recovery for creditors and customers.
Asset recovery is the process of identifying, locating, and retrieving assets that have been lost, stolen, mismanaged, or otherwise improperly withheld, typically to return them to their rightful owners or to satisfy legal obligations. FTX’s efforts to reclaim funds, tokens, or other assets owed to the FTX estate following its collapse in November 2022.
Determining what assets are owed or missing, such as funds, cryptocurrencies, tokens, or other financial instruments. In FTX’s case, this includes tokens that issuers like NFT Stars Limited and Delysium were contractually obligated to deliver. Investigating where the assets are held, whether by individuals, companies, or third parties.
This may involve forensic accounting, blockchain analysis (for crypto assets), or legal discovery processes to track funds or tokens. Filing lawsuits or claims to compel the return of assets, as FTX is doing against token providers who have refused to release funds or deliver tokens. Legal mechanisms may include court orders, injunctions, or negotiations to recover the assets.
Once assets are recovered, they are typically managed by a trust, administrator, or bankruptcy estate (like the FTX Recovery Trust) to ensure they are distributed fairly to creditors, customers, or other stakeholders. In FTX’s case, recovered assets are intended to repay customers affected by the exchange’s collapse.
Assets may be held in different countries with varying legal systems, complicating recovery. Entities may refuse to return assets, as seen with the token issuers FTX is suing. The value of assets, especially cryptocurrencies, may fluctuate, affecting recovery outcomes. Assets may be hidden or transferred to obscure ownership, requiring extensive investigation.
FTX’s asset recovery efforts stem from its bankruptcy proceedings after a massive fraud led to billions in customer losses. The company is pursuing. Suing token providers who failed to deliver promised tokens or return funds. Recovering assets to increase the pool available for customer repayments, as overseen by the FTX Recovery Trust. Using lawsuits to enforce compliance after failed negotiations, with plans for further litigation against non-responsive parties.
Asset recovery is critical in bankruptcy or insolvency cases to ensure equitable treatment of creditors and victims. For FTX, successful recovery could mean billions returned to customers, though challenges like litigation costs, delays, and asset volatility may limit outcomes. The process also sets precedents for handling disputes in the crypto industry, where contractual and jurisdictional complexities are common.
When a company like FTX files for bankruptcy, its assets (cash, cryptocurrencies, tokens, intellectual property, etc.) are pooled into a “bankruptcy estate” managed by a trustee or administrator (e.g., the FTX Recovery Trust). The estate includes assets recovered through lawsuits, such as those FTX is pursuing against token providers.
FTX is undergoing Chapter 11 bankruptcy (reorganization) in the U.S., which allows the company to restructure while maximizing asset recovery for creditors. In some cases, Chapter 7 (liquidation) may apply, where assets are sold off to pay creditors. The process is governed by the U.S. Bankruptcy Code, though FTX’s global operations involve international coordination.
Assets are distributed based on a strict hierarchy of claims, determined by law. Those with collateral (e.g., loans backed by specific assets) are paid first from the sale of that collateral. Cost of the bankruptcy process, like legal fees or trustee compensation, take priority.
Certain claims, like employee wages or taxes, may rank higher than general unsecured claims. General Unsecured Creditors: Includes customers, vendors, or others without collateral (most FTX customers fall here). Shareholders or owners (e.g., FTX’s investors) are last and often receive nothing unless all creditors are fully paid.
In FTX’s case, customer claims (e.g., for lost crypto deposits) are a major focus, treated as unsecured claims but with potential priority under the bankruptcy plan. Assets in the estate are liquidated (sold for cash) or, in FTX’s case, recovered through lawsuits or negotiations (e.g., against token issuers like Delysium). Cryptocurrencies may be converted to fiat currency for distribution, though some plans allow in-kind distributions (e.g., returning Bitcoin to customers).
A court-approved plan outlines how assets will be distributed. FTX’s plan, under development, aims to repay customers based on the value of their accounts at the time of bankruptcy (November 2022), adjusted for market conditions. The plan requires creditor approval and court confirmation, balancing fairness and feasibility. Once the plan is approved, the trustee or administrator distributes assets to creditors according to the priority scheme.
Payments may be made in installments if assets are recovered over time (e.g., as FTX wins lawsuits). In FTX’s case, the Recovery Trust oversees distributions to ensure transparency and compliance. FTX’s collapse left billions in customer losses due to fraud and mismanagement. The bankruptcy estate is recovering assets through lawsuits (e.g., against token providers), clawbacks of improper transfers, and liquidation of remaining holdings.
FTX has prioritized repaying customers, with estimates suggesting over $14 billion in assets could be available for distribution. Customers may receive payments based on their account balances as of November 2022, though disputes over valuation (due to crypto price volatility) persist. Lawsuits against token issuers, like those announced on April 29, 2025, aim to recover undelivered tokens or funds to bolster the estate. Success in these cases directly increases funds for distribution.
The value of recovered crypto assets fluctuates, complicating fair distribution. FTX’s international customer base creates jurisdictional issues, requiring coordination across legal systems. Some assets were misappropriated by FTX insiders (e.g., Sam Bankman-Fried), requiring complex clawback litigation. Bankruptcy proceedings and lawsuits can take years, delaying payouts.
FTX sues token providers like NFT Stars Limited, recovering owed tokens or funds. Recovered assets are added to the bankruptcy estate, managed by the FTX Recovery Trust. Customer and creditor claims are verified (e.g., based on account balances in November 2022). A distribution plan is proposed, prioritizing customers and approved by the court. Assets are distributed, potentially as cash or crypto, with customers receiving proportional shares based on their claims.
Bankruptcy asset distribution ensures an orderly resolution of debts, maximizing returns for creditors and minimizing chaos. For FTX customers, the process determines how much of their lost funds they may recover. However, outcomes depend on the success of asset recovery efforts, the size of the estate, and legal rulings on claim priorities.
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