FTX Trust Sues Genesis Digital for $1.15 Billion Recovery

The FTX Recovery Trust filed a massive lawsuit against Bitcoin mining company Genesis Digital Assets Ltd. on September 22, 2025. The lawsuit filing seeks to recover $1.15 billion that allegedly came from misappropriated customer deposits.

This lawsuit marks one of the largest recovery efforts since FTX collapsed in November 2022. The bankruptcy trust claims Sam Bankman-Fried used stolen customer money to fund investments through his trading firm Alameda Research.

The Core Allegations

The lawsuit filed in the US Bankruptcy Court for the District of Delaware targets Genesis Digital Assets and its co-founders. The trust claims that Alameda Research invested over $1 billion in the Bitcoin mining company between 2021 and 2022.

FTX Trust argues these investments were fraudulent transfers made with customer funds that should have stayed in FTX accounts. The complaint states that Bankman-Fried mixed customer deposits with company money to make these deals.

Genesis Digital Assets became one of the biggest investments in Alameda’s portfolio during this period. The mining company used these funds to expand its operations and purchase mining equipment.

Legal Framework Behind the Lawsuit

Under U.S. bankruptcy law, the FTX Trust can pursue “avoidance actions” to get back money transferred before the exchange went bankrupt. These laws help trustees recover funds that left a company improperly before it filed for bankruptcy protection.

The trust must prove these transfers happened during a specific time period before FTX’s collapse. They also need to show the transfers were made with intent to defraud creditors or were otherwise improper.

This type of legal action, called a “clawback suit,” allows bankruptcy trustees to reverse transactions that shouldn’t have happened. The goal is to put money back into the bankruptcy estate for creditors.

What FTX Trust Wants

The lawsuit seeks more than just the original $1.15 billion investment amount. Court filings show the trust wants additional money that might be discovered during the legal process.

FTX Trust also demands Genesis Digital Assets pay for attorney fees, interest charges, and other costs related to the lawsuit. This could push the total amount much higher than the initial $1.15 billion figure.

The trust argues that Genesis Digital Assets should have known these funds came from improper sources. They claim the mining company benefited from money that belonged to FTX customers.

Broader Recovery Strategy

This Genesis Digital lawsuit is part of FTX’s wider effort to recover assets for creditors. The bankruptcy estate has filed multiple lawsuits against companies and individuals who received money from FTX or Alameda Research.

FTX previously filed a $1.8 billion lawsuit against Binance and its former CEO Changpeng Zhao in November 2024. The exchange has also targeted political figures, investment firms, and other crypto companies.

At the same time, FTX has been making creditor payments throughout 2025. This dual approach aims to recover assets while returning money to people who lost funds in the collapse.

The exchange’s bankruptcy revealed that over $8 billion in customer funds went missing. Investigators found that customer deposits were used for trading losses, real estate purchases, and various investments.

The Path Forward

The Genesis Digital lawsuit will likely take months or years to resolve through the court system. The mining company can challenge the allegations and argue the investments were legitimate business deals.

Genesis Digital Assets has not publicly responded to the lawsuit yet. The company will need to file a response in bankruptcy court within a specific timeframe set by the judge.

This case could set important precedents for other recovery actions in the FTX bankruptcy. The outcome might influence how courts handle similar clawback suits against other companies that received Alameda investments.

The lawsuit also highlights the complex web of transactions that occurred before FTX’s collapse. Investigators continue to trace money flows between FTX, Alameda Research, and dozens of other entities.

Bottom Line: Recovery Marathon Continues

The $1.15 billion Genesis Digital lawsuit represents another major step in FTX’s long journey to recover customer funds. While creditors have received some payments, billions in assets remain tied up in legal battles that could stretch on for years.