A lawsuit has been filed against Bitcoin mining enterprise Genesis Digital Assets Ltd. by the FTX Recovery Trust, seeking the return of $1.15 billion. The trust alleges that these funds were improperly transferred by Sam Bankman-Fried, the former CEO of the now-bankrupt cryptocurrency exchange, FTX.
The lawsuit aims to compel Genesis Digital, its associated entities, and its co-founders, Rashit Makhat and Marco Krohn, to return the funds. The trust claims Bankman-Fried illicitly transferred the money, utilizing commingled and improperly diverted assets belonging to the FTX business.
According to the legal filing, submitted Monday to the U.S. Bankruptcy Court in Delaware, the majority of the money came from customer deposits held at the FTX.com exchange.
This legal action is part of a broader, ongoing multi-year initiative by the FTX Recovery Trust, established as part of FTX’s bankruptcy proceedings, to recover assets for creditors. This follows the exchange’s dramatic collapse in 2022. Bankman-Fried is currently serving a 25-year prison sentence following his conviction on seven counts, including fraud and conspiracy.
Genesis Digital, previously a Kazakhstan-based Bitcoin mining operation, allegedly benefitted from close ties to the country’s former leader, Nursultan Nazarbayev, including advantageous access to low-cost energy. After China restricted Bitcoin mining activities in 2021, many miners relocated to Kazakhstan, placing a strain on the country’s power infrastructure, according to the lawsuit.
The lawsuit details that a series of events in Kazakhstan during 2021 negatively impacted the company’s alleged preferential treatment. These events included the introduction of new taxes on cryptocurrency miners, widespread power outages, energy rationing, public unrest related to energy costs, and Nazarbayev’s eventual resignation.
As a result of these challenges, Genesis Digital reportedly sought funding to relocate and expand its operations within the United States, according to the claim.
The FTX trust asserts that between August 2021 and April 2022, Bankman-Fried channeled investments into Genesis Digital via his personal hedge fund, Alameda Research LLC, at “excessively inflated prices” while the greater FTX organization faced insolvency. The trust states that Alameda received significantly less than reasonable market value in return for its $1.15 billion investment.
The lawsuit further alleges that Bankman-Fried disregarded several warning signals concerning Genesis Digital. These included the energy crisis at their Kazakhstan location, a lack of interest from other prominent investors, unaudited financial statements, unsigned financial documents, and reports linking Genesis Digital to potential money laundering and tax evasion.
According to the legal filing, an internal board member described Genesis Digital’s substantial valuation increase, from $3.25 billion in July 2021 to between $8.3 billion and $12.2 billion by November 2021, as “insane and off-market.”
The lawsuit also notes that Bankman-Fried visited Kazakhstan in December 2021 to meet with President Kassym-Jomart Tokayev in an attempt to address concerns surrounding cryptocurrency mining, but his efforts were unsuccessful.
The claim asserts that Genesis Digital “stands as one of Bankman-Fried’s most irresponsible investments using commingled and misappropriated funds.”
The firm has not yet issued a statement on the matter.
According to the lawsuit, the investments enriched Bankman-Fried and facilitated the founders of Genesis Digital to “cash out of a failing company.” The deal reportedly allowed Makhat and Krohn to sell $550.9 million of their personal shares directly to Alameda.
The FTX trust is being represented by the law firms Sullivan & Cromwell LLP, Quinn Emanuel Urquhart & Sullivan LLP, and Landis Rath & Cobb LLP.
The legal case is titled FTX Recovery Trust v. Genesis Digital Assets Limited, Bankr. D. Del., No. 25-52358, complaint 9/22/25.