FTX Trust Sues Genesis Over SBF's Inflated $1.15B Crypto Investment

The FTX Recovery Trust has filed a $1.15 billion lawsuit against Genesis Digital Assets Ltd., alleging fraudulent transfers orchestrated by Sam Bankman-Fried, the former co-founder of the collapsed cryptocurrency exchange. The lawsuit, filed in the U.S. Bankruptcy Court for the District of Delaware, seeks to recover funds the trust claims were improperly funneled to Genesis Digital through commingled and misappropriated assets from FTX’s business. The case is part of the FTX Trust’s broader efforts to claw back assets for creditors amid its ongoing bankruptcy proceedings .

The FTX Trust alleges that between August 2021 and April 2022, Bankman-Fried used his hedge fund, Alameda Research, to invest in Genesis Digital at “outrageously inflated prices” while FTX was insolvent. The trust claims Alameda received less than fair value for its $1.15 billion investment, which it contends originated largely from customer deposits at the FTX.com exchange. The lawsuit characterizes these transactions as “typical examples of fraudulent transfers,” arguing that Bankman-Fried benefited personally while risking nothing, as the Genesis shares he acquired were held by Alameda, where he had a 90% ownership stake .

Genesis Digital, a Bitcoin mining firm based in Kazakhstan, is accused of leveraging political connections to the country’s , Nursultan Nazarbayev, including access to low-cost energy. The FTX Trust’s complaint notes that Genesis sought financing to expand in the U.S. amid energy crises, social unrest, and regulatory challenges in Kazakhstan. The firm’s valuation reportedly surged from $3.25 billion in July 2021 to between $8.3 billion and $12.2 billion by November 2021, a growth described by one of its own board members as “insane and off-market” .

The lawsuit highlights red flags ignored by Bankman-Fried, including unaudited financial records, unsigned documents, and reports linking Genesis to money laundering. Despite these risks, Bankman-Fried traveled to Kazakhstan in December 2021 to meet with President Kassym-Jomart Tokayev, an effort the trust claims failed to address underlying concerns. The FTX Trust argues that the investment allowed Genesis’s co-founders, Rashit Makhat and Marco Krohn, to sell $550.9 million of their shares to Alameda, effectively enabling them to “cash out of a failing company” .

The FTX Trust is represented by Sullivan & Cromwell LLP, Quinn Emanuel Urquhart & Sullivan LLP, and Landis Rath & Cobb LLP. The case, titled FTX Recovery Trust v. Genesis Digital Assets Limited, is seeking not only the $1.15 billion but also additional recoveries, attorneys’ fees, and interest. This legal action coincides with the FTX Trust’s preparation for its third creditor distribution, scheduled to begin on September 30, 2025, following the collapse of the exchange in 2022 .

The FTX Trust’s pursuit of Genesis Digital underscores the complexities of tracing intercompany transactions in the crypto sector. The lawsuit’s success could set a precedent for similar clawback efforts, reinforcing the application of U.S. bankruptcy laws to recover assets from interconnected entities. For now, the FTX Trust’s focus remains on maximizing returns for creditors, a challenge compounded by the volatile nature of the crypto market. The native FTX token, FTT, has seen recent price swings, trading at $0.82 as of September 2025 after surging above $1 earlier in the month .

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