FTX-affiliated trading firm, Alameda Research, recently filed a complaint against Crypto.com to unlock over $11 million held in a Crypto.com account.

On November 7, Alameda Research filed a lawsuit in the United States Bankruptcy Court for the District of Delaware, requesting Crypto.com to release approximately $11.4 million held in an account registered under “Ka Yu Tin,” an alias associated with Alameda’s operations before FTX’s bankruptcy. According to court documents, Alameda alleges that Crypto.com has refused multiple requests to return the assets, which the firm claims are critical to its debt-repayment strategy.

Former Alameda CEO Caroline Ellison said in her sworn testimony that those funds, in fact, were Alameda’s and meant quite a lot concerning the ongoing recovery process of the bankrupt estate. Ellison’s declaration supports FTX’s stance that Crypto.com’s decision to lock the account unjustly withholds vital assets from FTX’s restructuring plan.

The $11 million stuck on Crypto.com represents a fraction of a broader asset freeze on FTX-related accounts since the company filed for Chapter 11 bankruptcy protection last November 2022. Several exchanges froze accounts owned by Alameda amidst the bankruptcy, citing the labyrinthine nature of FTX subsidiaries and trading activities. 

Similar to the Crypto.com case, Alameda has also filed legal action against KuCoin, seeking to unlock approximately $50 million that the exchange has retained since FTX’s collapse.

Crypto.com, however, has refrained from returning the assets, citing mismatches in account registration details and other regulatory constraints. Despite FTX’s attempts to address these discrepancies, Crypto.com has remained unresponsive, prompting Alameda to escalate the matter in court.

FTX’s Strategic Push for Asset Recovery

FTX’s focus on recovering blocked assets is an integral component of its bankruptcy restructuring and creditor repayment plan. After two years in bankruptcy proceedings, a court-approved plan now aims to reimburse FTX users with roughly 98% of their claimed amounts. However, asset recovery remains crucial to realizing this plan’s success, as the company’s former management mismanaged billions of dollars before its implementation.

In addition to the Crypto.com case, FTX’s legal team is pursuing claims against related companies, including entities linked to Crypto.com’s parent organizations. Foris MT and Iron Block, two companies under Crypto.com’s corporate umbrella, previously filed claims against FTX for millions held on its platform. FTX has requested the court defer these claims until Crypto.com releases the $11 million held in the Alameda account.

Ongoing Criminal Proceedings

The implosion of FTX was then followed by some serious criminal aftermath. Former top executives including founder Sam Bankman-Fried, were formally indicted on criminal charges. Bankman-Fried was convicted of fraud after Ellison and former director of engineering Nishad Singh – had been sentenced for their role in the collapse of FTX. Gary Wang, another co-founder, awaits sentencing, having cooperated with investigators.

Ellison’s affidavit, filed shortly before she began her prison sentence, is one of the latest moves in FTX’s broader efforts to establish the legitimacy of its asset recovery claims. By providing testimony, Ellison reaffirmed that the locked Crypto.com assets rightfully belong to Alameda, further reinforcing FTX’s legal stance.

The Federal Prison in Danbury, Connecticut currently holds 1246 prisoners. Caroline Ellison, inmate number 36854-510 is scheduled to remain here until July 20th, 2026

As FTX navigates bankruptcy proceedings and criminal fallout, its determination to recover assets locked on platforms like Crypto.com remains essential to repay creditors. The current legal action against Crypto.com highlights the barriers FTX faces, even as it closes in on financial restoration for impacted users.