In FTX litigation, feud escalates between bankruptcy and class action lawyers | Reuters

Both FTX bankruptcy lawyers and lawyers from the Miami MDL told the Manhattan judge earlier this month that they should be in charge of distributing some or all of the forfeited money to victims of Bankman-Fried’s fraud.

FTX lawyers said in a June 14 brief that the now-bankrupt exchange owns a lot of the money misappropriated by Bankman-Fried, so some of the forfeited funds should be disbursed to FTX’s creditors through the bankruptcy process.

But MDL lawyers said in their own June 14 brief that FTX’s customers have a stronger interest than FTX in recovering the money they deposited with the exchange before it went bust. That money, they argued, belongs to the customers who were fraudulently induced into opening accounts at the exchange – not to the exchange itself.

Somehow, three judges – Kaplan in the criminal case, U.S. Bankruptcy Judge John Dorsey in FTX’s Delaware Chapter 11 and U.S. District Judge Michael Moore in the Miami-based MDL – are going to have to hash out which court ought to be in charge and how FTX customers should be repaid. And they’re going to have to do that amid ugly allegations from each side about their counterparts.

Source: In FTX litigation, feud escalates between bankruptcy and class action lawyers | Reuters