FTX customers have filed a class action lawsuit against the failed cryptocurrency exchange as the company’s assets dwindle.
The application calls for a declaration that digital assets held by the company belong to its customers.
FTX was sued Tuesday along with former top executives, including Sam Bankman-Fried.
FTX is already in dispute with liquidators in the Bahamas and Antigua, as well as the bankruptcy estate of Blockfi, another failed crypto company.
US investigates how $370 million was lost in hack after FTX bankruptcy
According to a lawsuit filed in the U.S. Bankruptcy Court in Delaware, FTX promised to segregate customer accounts and instead allowed them to be embezzled, so it must pay customers back first.
“Customer class members are not required to stand alongside secured or general unsecured creditors in these bankruptcy proceedings just to share the reduced real estate assets of FTX Group and Alameda.
FOX Business has reached out to FTX for comment, but has yet to hear back.
Bankman-Fried case reassigned because judge’s husband has ties to FTX
The crypto exchange suspended withdrawals last month and filed for bankruptcy after customers rushed to withdraw their holdings.
Authorities arrested Bankman-Fried in the Bahamas earlier this month. He has since faced multiple charges from the Southern District of New York and the Securities and Exchange Commission.
How did Bankman-Fried secure $250 million in bail?
The FTX founder was flown to New York last week after deciding not to contest his extradition.
The proposed lawsuit, which seeks to represent more than one million FTX customers in the United States and abroad, seeks a declaration that traceable customer assets are not FTX assets.
CLICK HERE FOR MORE INFORMATION ON FOX BUSINESS
FTX was once the second largest cryptocurrency exchange.
Reuters contributed to this report.