The FTX Recovery Trust has filed a $1.15 billion lawsuit against Bitcoin mining firm Genesis Digital Assets, alleging fraudulent transfers involving misappropriated customer funds from the collapsed FTX exchange. The complaint was filed on September 22, 2025, in the U.S. Bankruptcy Court for the District of Delaware, targeting Genesis Digital, its affiliates, and co-founders Rashit Makhat and Marco Krohn.
According to court documents, Sam Bankman-Fried used his hedge fund, Alameda Research, to invest in Genesis Digital shares at "outrageously inflated prices" between August 2021 and April 2022, while FTX was insolvent. The trust alleges that Bankman-Fried, as 90% owner of Alameda, diverted FTX customer deposits for these investments, with co-founders Makhat and Krohn receiving $470 million and $80.9 million, respectively, for their shares in February 2022. Discussions began in July 2021, and Bankman-Fried joined Genesis Digital's board in October 2021, overseeing four investment rounds totaling $1.15 billion: $100 million in August 2021, $550 million in January 2022, $250 million in February, and $250 million in April 2022.
The lawsuit characterizes Genesis Digital as "one of Bankman-Fried’s most reckless investments with commingled and misappropriated funds," noting that the mining company faced warning signs like Kazakhstan's energy crisis, unaudited financial records, and alleged money laundering links. Genesis Digital's valuation surged from $3.25 billion in July 2021 to between $8.3 billion and $12.2 billion by November 2021, described by a board member as "insane and off-market." Bankman-Fried resigned from the board a day before FTX's November 2022 bankruptcy filing and is currently serving a 25-year prison sentence, with an appeal scheduled for November 4, 2025.
This lawsuit is part of broader recovery efforts by the FTX trust, which has already distributed $6.2 billion to creditors through two rounds and plans a $1.6 billion payout on September 30, 2025. Genesis Digital, which operates over 500 megawatts of mining capacity across 20 data centers, saw its valuation peak at $5.5 billion in April 2022 and was exploring a U.S. IPO as recently as July 2024. The complaint also alleges that Genesis Digital's U.S. subsidiaries, such as Dog House TX-1 and Mother Whale LLC, act as "alter egos" of the parent company, potentially exposing the entire structure to clawback claims under bankruptcy and fraudulent transfer laws.