- Bankman-Fried and GDA had started connecting in 2021
- GDA, at the time, had wanted to expand its business from Kazakhstan to the U.S.
- FTX collapsed in 2021 owing to Bankman-Fried’s mismanagement of funds
The FTX Recovery Trust has filed a complaint against crypto mining firm Genesis Digital Assets (GDA) hoping to recover a whopping $1.15 billion. The FTX Recovery Trust is the entity handling the bankruptcy of the now defunct FTX exchange.
The complaint claims that FTX founder Sam Bankman-Fried had purchased 154 preferred shares of GDA for over $500 million while also having sent $550.9 million to GDA founders Rashit Makhat and Marco Krohn to acquire more GDA shares. The legal filing said that these shares were recklessly purchased by the now imprisoned Bankman-Fried at “outrageously inflated prices”.
Bankman-Fried had FTX’s sister firm — Alameda Research to borrow funds from the FTX exchange to facilitate these transactions. Bankman-Fried owned 90 percent of Alameda.
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“GDA stands as one of Bankman-Fried’s most reckless investments with commingled and misappropriated funds. By the time the purchases were made, the FTX insiders were regularly causing Alameda to ‘borrow’ (i.e., loot) billions of dollars from the FTX.com exchange to fund their own profligate lifestyles and vanity investments—all while hiding the source of these funds from investors, creditors, and the general public,” the complaint viewed by CoinHeadlines noted.
Bankman-Fried and GDA had stepped into their discussion phase back in 2021 when Kazakhstan-based GDA wanted to raise funds and expand operations to the U.S.
“In total, Bankman-Fried caused Alameda to transfer $1.15 billion as investments in GDA, including $600 million to GDA and $550 million to Krohn and Makhat. Despite repeated promises, GDA did not provide Alameda any audited financials until December 2023,” the complaint added.
GDA’s Kazakhstan business has now fallen to a “worthless” state, the complaint noted. The company’s response to this fresh complaint remains awaited for now.
FTX collapsed in 2021 owing to Bankman-Fried’s mismanagement of funds. In 2023, the exchange founder was convicted and given a 25-year-prison sentence — which is currently serving at the Federal Correctional Institution (FCI) Mendota in California.
The FTX Recovery Trust, meanwhile, initiated reimbursement for FTX creditors in February this year with a $1.2 billion payout, followed by a $5 billion distribution in May. As per reports, it is likely to step into the next phase of reimbursements by unlocking $1.6 billion for creditors on September 30.
