FTX Trust Alleges $1.15B Fraudulent Infusion to Genesis by Ex-CEO's Firm

The FTX Recovery Trust has initiated a $1.15 billion legal action against Bitcoin mining firm Genesis Digital Assets, alleging fraudulent transfers of FTX customer funds orchestrated by former CEO Sam Bankman-Fried. The lawsuit, filed in the U.S. Bankruptcy Court for the District of Delaware, claims that Bankman-Fried’s hedge fund, Alameda Research, funneled over $1.15 billion into Genesis between August 2021 and April 2022 through four investment rounds: $100 million in August 2021, $550 million in January 2022, $250 million in February, and $250 million in April 2022. The trust argues that these transactions occurred while FTX was insolvent, with Alameda receiving disproportionately low value for the investments, which were sourced from customer deposits at the FTX.com exchangeFTX Trust Sues Genesis Digital for $1.15B Clawback Over Alleged ...^[1].

The complaint highlights that Genesis co-founders Rashit Makhat and Marco Krohn personally benefited from the scheme, selling $550.9 million and $80.9 million of their shares to Alameda in 2022, respectivelyFTX Trust Sues Crypto Miner Genesis Digital Over $1.15 Billion^[2]. The trust alleges that the investments enriched Bankman-Fried and his hedge fund while depriving FTX creditors of critical assets. Internal communications cited in the filing describe the valuations paid for Genesis shares as “insane and off-market,” with contemporaneous risks including Kazakhstan’s energy crisis, regulatory challenges, and unaudited financial recordsFTX Trust Files $1.15 Billion Lawsuit Against Bitcoin Miner …^[3].

The lawsuit asserts that Genesis Digital, based in Kazakhstan, leveraged political connections to Nursultan Nazarbayev for access to low-cost energy and favorable treatment. However, by late 2021, the company faced mounting challenges, including rolling blackouts, new taxes on miners, and social unrest. Despite these red flags, Bankman-Fried, who joined Genesis’s board in October 2021, proceeded with the investmentsFTX Trust sues Genesis Digital over $1.15B transfers^[4]. The trust further claims that Bankman-Fried’s 90% ownership of Alameda allowed him to control the transactions, with no tangible benefit to FTX’s operations.

Legal claims under U.S. bankruptcy law and Delaware’s Uniform Fraudulent Transfer Act form the basis of the suit. The trust seeks to “claw back” the funds, arguing that the transfers were fraudulent and caused “great detriment” to FTX customers and creditors. The case adds to the broader recovery efforts by the FTX estate, which has distributed $6.2 billion to creditors in three rounds since 2023, with a final $1.6 billion payout scheduled for September 30, 2025FTX Recovery Trust sues Genesis Digital to recover $1.15B in …^[5].

Genesis Digital’s corporate structure is also under scrutiny, with the complaint alleging that its U.S. subsidiaries—such as Dog House TX-1 and Mother Whale LLC—operate as “alter egos” of the parent company. This could expose the entire entity to liability under fraudulent transfer statutesBankruptcy Reveals $1 Billion FTX-Tied Stake in Bitcoin Miner^[6]. Meanwhile, Bankman-Fried, serving a 25-year prison sentence after his 2023 conviction on seven felony charges, faces an appeal hearing in November 2025. The lawsuit follows a $175 million settlement earlier this year with Genesis Global, a subsidiary of Digital Currency Group, as the FTX estate continues to pursue recovery across multiple jurisdictionsFTX Trust sues Genesis Digital for $1.15 billion^[7].

The case underscores the scale of FTX’s collapse and the complexity of its aftermath. The $1.15 billion lawsuit is one of the largest clawback actions in U.S. bankruptcy history, reflecting the trust’s aggressive strategy to maximize returns for creditors. With over $16.5 billion earmarked for victims, the outcome could influence future litigation involving misappropriated funds and corporate accountability in the crypto sectorFTX Recovery Trust sues Genesis Digital to recover $1.15B in allegedly fraudulent transfers^[8].