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Judge refuses to consolidate class action suits against FTX

Judge refuses to consolidate class action suits against FTX

A federal judge has refused to consolidate a number of proposed class-action lawsuits against the FTX exchange by investors. According to the judge, the exchange and its defendants have not yet been heard on the matter. 

Excerpt from the order denying the motion to consolidate. Source: Law360

On March 8, United States District Judge Jacqueline Scott Corley laid down the order that denied a request from plaintiffs to consolidate a total of five proposed class action lawsuits against the bankrupt crypto exchange. Despite no defendants opposing the motion, the judge pointed out that not all defendants had the opportunity to respond yet. The order wrote: 

“While Plaintiffs state that no Defendant has filed an opposition, they offer no declaration attesting that they have met and conferred with Defendants and that they do not oppose consolidation.”

Plaintiffs including Julie Papadakis, Michael Elliott Jessup, Stephen T. Pierce, Elliott Lam and Russell Hawkins accused the former FTX CEO Sam Bankman-Fried and other executives of misappropriating their assets, filing their cases in the Northern District of California. While all of the plaintiffs are going after Bankman-Fried, the cases also includes various other defendants, including outside auditors and those that promoted the exchange.

Because of this, the judge also pointed out there’s no need to consolidate before hearing out the defendants’ side. “The Court discerns no need to do so now without giving Defendants the opportunity to be heard. And it would be premature to appoint interim class counsel before consolidation,” the order wrote.

Related: DOJ seeks to narrow Sam Bankman-Fried’s bail terms, use only flip phones

Meanwhile, Bankman-Fried’s lawyers have recently signaled that there might be a need to push back the criminal trial scheduled in October. In a letter dated March 8, lawyers representing Bankman-Fried said that while they’re not formally requesting a change of date, it may be necessary as they’re waiting for a substantial chunk of evidence to be sent over to them. In addition, the lawyers noted that more charges were filed against Bankman-Fried in February.