FTX Sues KuCoin for 50 Million in Asset Recovery Protecting Creditors HardEarned Money

The bankrupt exchange FTX has recently filed a lawsuit against the cryptocurrency exchange Kucoin, demanding the return of crypto assets belonging to FTX, valued at over $50 million.
(Background: Good news! Bybit will pay FTX $228 million to reach a settlement, furthering creditor repayments)
(Background Supplement: FTX repayment guide: 98% of creditors will receive 118% cash, repayment timeline, how much capital will return to the market?)
Article Contents
FTX sues Kucoin
More on FTX’s bankruptcy liquidation process
Contents of FTX’s bankruptcy plan
The restructuring team of the bankrupt cryptocurrency exchange FTX submitted the final voting results to the U.S. Bankruptcy Court in Delaware during the “confirmation hearing” earlier this month and has obtained approval from Judge John Dorsey for the plan, marking significant progress in the compensation process, with repayments potentially starting as soon as the end of this year (the final timeline is still subject to court and official announcement).
At the same time, FTX has recently reached a $228 million settlement agreement with the exchange Bybit, with FTX agreeing to drop its lawsuit against Bybit; the latter has agreed to pay the settlement, indicating it will recover more funds from the platform.
FTX sues Kucoin
On the 28th of this week, FTX filed documents in court, suing another cryptocurrency exchange, Kucoin, seeking to recover over $50 million in assets that Kucoin had seized.
According to FTX’s statement, shortly after FTX initiated its bankruptcy proceedings, Kucoin locked the Kucoin account of FTX’s sister company, Alameda Research, preventing the FTX bankruptcy team from accessing it.
FTX stated that at that time, the total value of these assets was approximately $30 million, but to date, it has risen to over $50 million. However, despite multiple requests to communicate with Kucoin and its legal representatives, Kucoin has continued to refuse to return these assets.
More on FTX’s bankruptcy liquidation process
After declaring bankruptcy in November 2022, FTX began a lengthy litigation and bankruptcy liquidation process. Following the trial of its founder, SBF, which concluded in Q1 of this year, the FTX liquidation team formally submitted its liquidation plan on May 7, which was approved by Judge John Dorsey on June 25 to move into the voting phase, ultimately receiving approval this past Tuesday.
Contents of FTX’s bankruptcy plan
In summary, the core content of FTX’s bankruptcy plan is to prioritize compensating users using the funds it has already recovered, before addressing potential competing claims from government regulatory agencies.
However, it is worth noting that, unlike the Mt. Gox exchange, which also initiated user compensation this year, FTX’s compensation details include:
1. Compensation Amount
According to the restructuring plan submitted by FTX to the Delaware bankruptcy court in May, once all assets are sold, the company estimates it will have up to $14.5 billion to $16.3 billion in cash available for distribution.
2. Compensation Form
Future loss compensation will be calculated based on the dollar price of cryptocurrencies on November 11, 2022, when FTX filed for Chapter 11 bankruptcy, rather than based on the cryptocurrency losses of creditors. Therefore, unless the assets held on FTX are stablecoins, users will effectively still incur significant losses.
For example, when FTX filed for bankruptcy protection, the price of Bitcoin was only about $16,000, but the current price of Bitcoin is approaching $64,000. This means that if a creditor held one Bitcoin at FTX at that time, they might ultimately only receive $16,000, just a quarter of the current price.
In this regard, FTX creditor representative Sunil Kavuri has repeatedly criticized that creditors will realistically only receive “10% to 25% of their cryptocurrency value,” which has left many creditors feeling disappointed and even dissatisfied.
However, the FTX liquidation team explained that when they took over FTX, there was already a significant shortfall in FTX’s account funds, with only 0.1% of the Bitcoin on the books remaining and only 1.2% of the Ethereum, meaning that if they were to compensate in actual cryptocurrencies, they would have to spend even more funds to purchase from the market, which is nearly unrealistic.
3. Compensation Standards
Based on the types of claims made by creditors, the vast majority of customers (creditors holding amounts below $50,000) can expect to receive approximately 118% of their losses, while some creditors may receive 142% of their losses.
At the same time, Galaxy Research head Alex Thorn recently stated that FTX would not make a lump-sum full payment; users with claim amounts under $50,000, which account for as much as 98% of the total, will receive a total of $1.1 billion in the first round of compensation, with remaining funds to be distributed in batches in Q1 and Q2 of next year.
4. Compensation Timeline
With the bankruptcy plan approved, experts expect that once the plan officially takes effect, FTX will compensate 98% of users within 60 days of the plan’s effectiveness, but the exact timeline still awaits official clarification.
According to a tweet from FTX creditor Mr. Purple on September 30, the expected effective date of the FTX bankruptcy plan is October 31, which, if true, would mean that FTX creditors may have the opportunity to receive compensation before the end of the year.
However, Mr. Purple also pointed out that another source from the claims trading market claims that specific compensation may be delayed until early 2025, as the proposal for establishing a compensation reserve by the Wind Down Board will not be raised until November at the earliest, and it may even be delayed until December. Therefore, it is still uncertain when creditors will be able to start receiving compensation.
5. FTX Exchange Restart Unlikely
In the early stages of FTX’s bankruptcy liquidation, some users speculated that FTX might be able to restart after bankruptcy restructuring. However, earlier media reports indicated that FTX has not found suitable investors or bidders, making the company’s reconstruction nearly impossible.
While FTX’s platform token FTT still exists in the market, if FTX does not undergo reconstruction, this cryptocurrency may lose any practical value in the future, becoming a “pump and dump” token.



?Related Reports?
Judge Approves: FTX to Launch $16 Billion Repayment (Creditors to Receive 18% Additional Interest), Bitcoin Countdown to Return to Bull Market?
FTX Sells 22.3 Million Worldcoin at a Discount This Week, WLD Falls Below $1.5
FTX Shareholders “Prioritize to Receive $230 Million,” Creditors Accuse of Injustice, Liquidation Team: Both Sides Are Victims