March 30, 2023

Alameda Research, an affiliate of failed crypto company FTX, has filed a lawsuit against asset manager Grayscale Investments, claiming that the company is improperly withholding investments from its customers. FTX’s new CEO, John J. Ray III, who is overseeing the bankruptcy process of the collapsed crypto exchange, stated that Grayscale has an “improper redemption ban” that is preventing customers from accessing their funds.

FTX went bankrupt in November after its team allegedly mismanaged the exchange by commingling funds and making risky bets with customer cash via Alameda. The collapse resulted in hundreds of millions of dollars in client cash going missing, with a large amount presumed stolen. FTX’s former CEO and co-founder, Sam Bankman-Fried, is facing a long list of criminal charges in American courts.

The lawsuit against Grayscale is seen as a bid to recover some of the lost funds for FTX’s customers and creditors. Ray stated that the lawsuit is part of FTX’s efforts to “maximize the value of the estate for the benefit of all stakeholders.” The lawsuit is expected to be closely watched by the crypto industry, as it could set a precedent for how asset managers handle redemptions during times of financial distress.

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