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Investors want to know when they can get their money back from bankrupt crypto exchange FTX, but bankruptcy lawyers warn it could take decades.
The cryptocurrency exchange, along with 130 affiliates, filed for Chapter 11 protection in the United States on Nov. 11.
Bankruptcy attorney Stephen Earel, partner of Co Cordis in Australia, said that figuring out how to realize crypto assets and distribute the funds would be a massive task in the liquidation process. decades.
This is due to the complexity involved in cross-border bankruptcy issues and competing jurisdictions, he said.
Earel said FTX users are unfortunately waiting alongside all other users, including other creditors, investors and venture capital funders, noting that “crypto-to-crypto trading warned that it may not see circulation “for years.”
Simon Dixon, founder of global investment platform BnkToTheFuture and an active participant in the Celsius bankruptcy proceedings, said that anyone who holds funds on FTX would become a creditor and would be required to represent their interests. He said a creditors committee would be established.
He said the remaining assets will eventually be made available to creditors depending on what is left after bankruptcy costs.
Binance Australia CEO says these costs can be high given the time it takes to collect funds, which means more legal and administrative costs eating into customer profits doing.
Meanwhile, digital asset attorney Irina Heber, a partner at Keystone Law in the United Arab Emirates, told Cointelegraph that she feels the pain of FTX’s demise as it has the third largest user base in the Middle East. He said he has users.
Heber said FTX has already received a license and regulatory oversight from Dubai’s newly created Virtual Assets Authority Regulatory Authority (VARA), which already has a “gigantic regulatory blunder”. He explained that it was causing a big problem for the authorities.
Heber said FTX will only move to Chapter 11 bankruptcy “when and if,” with creditor rights overseen by the legal system and involving courts and bankruptcy trustees.
Related: Bankrupt Cryptocurrency Exchange FTX Begins Strategic Review of Global Assets
Heaver’s advises those who have suffered significant losses in the FTX collapse to get legal advice and get together with “other victims.”
The recent FTX collapse has had serious consequences for investors around the world. It was recently revealed that a bankrupt cryptocurrency exchange may have one million or more creditors.According to Reuters paper The bankrupt cryptocurrency exchange, which went public on Nov. 20, owes “about $3.1 billion” to its top 50 creditors.
