The FTX Bankruptcy Trust has initiated a substantial $1.15 billion lawsuit against the Bitcoin mining firm Genesis Digital Assets. This action represents one of the largest clawback efforts to date, aiming to recover assets lost in the catastrophic collapse of the FTX cryptocurrency exchange.

The complaint outlines allegations that Genesis Digital Assets and its co-founders received over $1 billion in fraudulent transfers from Sam Bankman-Fried's Alameda Research between August 2021 and April 2022. The trust contends that these investments were executed at “outrageously inflated prices,” offering negligible value to FTX’s operations, which were already insolvent at the time of these transactions. The filing explicitly states that while FTX Group funds were utilized for these share purchases, only Alameda, and by extension Bankman-Fried as its 90% owner, stood to benefit, causing significant harm to FTX.com’s customers and other creditors.

Operating under U.S. bankruptcy law, the trust possesses the authority to pursue “avoidance actions.” These legal measures are specifically designed to reclaim funds that were improperly transferred prior to a company’s bankruptcy filing. The sheer magnitude of this lawsuit underscores the extensive and intricate nature of FTX’s asset recovery campaign, which has emerged as one of the most complex in U.S. bankruptcy history since the exchange’s downfall in 2022.

According to the lawsuit, a significant portion of the funds originated from customer deposits on FTX.com. These deposits were allegedly funneled into Alameda Research before being redirected to Genesis Digital. Furthermore, the trust asserts that Genesis Digital’s co-founders, Rashit Makhat and Marco Krohn, personally profited from these transactions, reportedly selling more than $550 million worth of their shares to Alameda during this period.

The complaint also characterizes Genesis Digital as a politically connected miner based in Kazakhstan, which reportedly leveraged cheap energy and favorable treatment under the country’s former president, Nursultan Nazarbayev. However, by late 2021, Kazakhstan’s power grid began experiencing significant strain due to an influx of miners, and the industry faced increasing instability from new taxes, widespread blackouts, and social unrest.

Despite these evident risks, which included unaudited financials, concerns about money laundering, and a clear lack of interest from other investors, Bankman-Fried allegedly proceeded with these unusually large investments. The FTX Bankruptcy Trust explicitly labels Genesis Digital as one of Bankman-Fried’s most reckless investments, made with commingled and misappropriated funds. This legal action unfolds as Bankman-Fried continues to serve a 25-year prison sentence, following his conviction on seven criminal counts, including fraud and conspiracy, related to the collapse of FTX.