FTX creditors have launched a class action lawsuit against Kroll Restructuring Administration, the firm managing claims for the bankrupt crypto exchange.
The suit, filed on Aug. 20 by US-based Hall Attorneys, alleged that Kroll’s handling of claims for FTX, BlockFi, and Genesis customers caused financial harm and exposed sensitive information to cybercriminals.
According to the lawsuit, Kroll knew emails were unsafe, as it consistently warned about phishing risks after it suffered a data breach incident in August 2023.
At the time, an unauthorized party gained access to a Kroll employee’s mobile number, which allowed entry into Kroll’s systems and exposure of creditor data, including names, addresses, email contacts, and some FTX account balances.
However, the firm reportedly continued to send critical notices solely via email, leaving claimants vulnerable to scams and phishing attacks.
Notably, Sunil Kavuri, a prominent FTX creditor, confirmed that phishing emails have become a daily concern for the defunct exchange’s users. He noted receiving a fraudulent message containing his full name just hours before posting about it on X.
Meanwhile, the lawsuit claims Kroll’s approach also caused verification delays, lockouts, and, in certain cases, the loss of claims by FTX creditors.
Considering this, Nicholas Hall, the lead counsel on the case, urged FTX creditors to join the legal battle. According to him:
“All creditors are encouraged to participate; it’s for both US and Bahamas customer-creditors.”
He also pointed out that the suit seeks compensation for losses related to phishing attacks, delayed claims, and expunged filings. Hall said:
“[FTX creditors could get] monetary relief for eligible class members (for example, up to $750 or actual damages for California victims, but depends on class, residency, etc.).”
Beyond monetary relief, plaintiffs are demanding practical reforms, including multi-channel communications through both email and First-Class Mail, status-change notifications with mandatory response periods, a manual tax-form option, and stricter security controls for account changes, such as mailing verification codes before permitting updates.
Additional demands include deliverability safeguards and independent audits to strengthen data protection.