FTX appeals to FDIC for return of funds from defunct Signature Bank News ▸ US ▸ FTX ▸ Bankruptcy
FTX appeals to FDIC for return of funds from defunct Signature Bank
FTX is mounting a legal push to reclaim philanthropic funds that had been held in a Signature Bank account before its closure.
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Updated: Dec. 22, 2023 at 4:14 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt cryptocurrency firm FTX is seeking to retrieve an undisclosed amount from the U.S. Federal Deposit Insurance Corporation (FDIC) on the grounds that the funds were held for FTX Philanthropy, previously known as FTX Foundation, at Signature Bank, which ceased operations in March 2023.
According to a Dec. 21 court filing, bank records confirm that transfers from members of FTX Estate—West Realm Shires Services, Inc. and Debtor North Dimension, Inc.—funded the Philanthropy bank account ending in 8361 at the failed Signature Bank between April and October 2022.
However, Signature Bank’s subsequent failure led to its placement under FDIC control by the New York State Department of Financial Services.
Consequently, FTX has requested that the regulator transfer the funds back to the company. FTX noted the FDIC’s willingness to return the funds pending a court order. It wrote:
“The FDIC understands that the funds in the Signature Account (the “Funds”) are property of the Debtors’ estates because the account was funded by Debtor West Realm Shires Services, Inc. and Debtor North Dimension, Inc. The FDIC has represented to the Debtors that it is ready, willing, and able to transfer the Funds in the Signature Account to the Debtors but requires an order of this Court to do so.”
This move represents FTX management’s latest effort to recover funds from the bankrupt firm for the benefit of its customers. Throughout the year, the firm has filed legal actions against its founder, Sam Bankman-Fried, his parents, and several other entities like K5 Global in its bid to recover funds.
Meanwhile, the firm recently released a reorganization plan that observers have criticized for being “underwhelming.”
Signature Bank was one of the numerous crypto-friendly banks that closed operations earlier in the year. The FDIC claims the root cause of its troubles was poor management and risky crypto deposits.
Notably, FTX customers had filed a class-action lawsuit against the bank for its role in the defunct crypto exchange FTX operations.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Signature Bank
Signature Bank® (NASDAQ: SBNY) is a New York-based full-service commercial bank with private client offices throughout the New York Metropolitan area, Connecticut, North Carolina and California.
