The FTX Recovery Trust has taken legal action against Genesis Digital Assets and several people linked to the company. They’re asking the court to help recover around $1.15 billion that they believe was transferred under suspicious circumstances. The lawsuit is being handled in the US Bankruptcy Court in Delaware and is tied to the ongoing fallout from the collapse of FTX.
What the Trust Claims Happened
According to the filing, Sam Bankman-Fried used money from Alameda Research, his hedge fund, to invest in Genesis Digital. But the prices he paid were far higher than what the company was actually worth, according to the trust.
BREAKING:
The FTX Bankruptcy Trust filed a $1.15 billion lawsuit against Bitcoin mining firm Genesis Digital Assets
— Rayan Shahid
(@CallmeRaynn) September 23, 2025
The purchases took place between August 2021 and April 2022. The money, they say, came straight from user funds on FTX.com. The complaint specifically names Genesis Digital’s founders, Rashit Makhat and Marco Krohn.
Warning Signs Were There
The lawsuit points out that there were several signs suggesting the deal was risky. For one, Kazakhstan’s electricity grid was already under strain from Bitcoin miners moving there after China’s ban, and Genesis Digital was heavily involved in the region. On top of that, the company’s financial records weren’t audited. Reports also linked them to possible tax issues and money laundering concerns.
Despite all this, the investment moved ahead. Within a short time, the company’s valuation jumped from $3.25 billion to as high as $12.2 billion, which raised eyebrows even inside the company. One board member reportedly called the rise “insane and off market.”
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Founders Allegedly Cashed Out
The trust says Genesis Digital’s founders sold about $551 million worth of their own shares to Alameda during a time when FTX’s financial health was already falling apart. According to the complaint, this was done at the expense of FTX users, and the shares were priced far above what they should have been. The lawsuit claims this was a way for the founders to exit a sinking company while taking advantage of misused customer funds.
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Why It’s a Big Deal
This is one part of a larger effort to get back lost money after FTX’s dramatic collapse in 2022. The trust’s job is to track down questionable deals and try to return those funds to the people and organizations that are still owed money. A win in this case could put a big chunk of that cash back on the table for creditors who have been waiting for answers and repayment.
What Comes Next
The next steps depend on how Genesis Digital and the named parties respond. They might fight the claims in court or try to settle. Either way, the outcome could set a major precedent for how crypto-related fraud is handled in bankruptcy cases. Other companies and regulators will likely be watching closely, especially if the court finds that these types of inflated deals can be unwound. The results could have ripple effects on how deals are made and evaluated in the crypto space going forward.
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Key Takeaways
- The FTX Recovery Trust is suing Genesis Digital Assets to recover $1.15 billion linked to alleged misuse of user funds.
- Sam Bankman-Fried is accused of using Alameda Research funds to overpay for shares in Genesis Digital between 2021 and 2022.
- Red flags included unaudited financials, power issues in Kazakhstan, and internal concerns over the company’s rapidly inflated valuation.
- Genesis Digital’s founders allegedly sold over $550 million worth of shares to Alameda during FTX’s financial collapse.
- The lawsuit could influence how courts handle inflated crypto deals and may set a precedent for future bankruptcy recoveries.
The post FTX Recovery Trust Sues Genesis Digital to Recover $1.15 Billion appeared first on 99Bitcoins.
