Obtaining funds from FTX could take years, even decades: Lawyers
The complexities of digital assets, cross-border insolvency and competing jurisdictions could add years to the timeline.
Interview
While investors are anxious to know when they will be able to recover their funds from the now bankrupt crypto exchange FTX, insolvency lawyers warn that it could take 'decades'.
The crypto exchange, along with 130 affiliates, filed for Chapter 11 bankruptcy protection in the United States on November 11.
Insolvency lawyer Stephen Earel, partner at Co Cordis in Australia, said it would be a “huge exercise” in the liquidation process to “realize” the crypto assets and then figure out how to distribute the funds , the process can take years, if not "decades".
This is due to the complexities that come with cross-border insolvency issues and competing jurisdictions, he said.
Earel said that unfortunately FTX users are in the queue with everyone else, including other creditors, investors and venture capital backers, warning that those who have made "crypto-to-crypto exchanges" may not see distribution "for years".
Simon Dixon, founder of global investment platform BnkToTheFuture, who was an active voice in Celsius's bankruptcy proceedings, noted that anyone holding funds on FTX will become a creditor, with a committee of creditors which will be created to represent their interests.
He said the remaining assets will eventually be made available to creditors based on what remains after bankruptcy costs.
These costs could be high given the time it takes to recover funds, according to the CEO of Binance Australia, noting that this means more legal and administrative costs that eat away at returning customers.
Meanwhile, digital asset lawyer Irina Heaver, a partner at Keystone Law in the United Arab Emirates, told Cointelegraph that there are users in the Middle East who are also feeling the pain of the collapse of FTX, as the region was FTX's third largest user base.< /p>
Heaver explained that as FTX has already received a license and regulatory oversight from the new Dubai Virtual Assets Authority (VARA) regulator, this presents major complications for regulators as they already have a "huge regulatory failure" in the hands.< /p>
Heaver said that "when and if" FTX enters Chapter 11 bankruptcy proceedings, creditors' rights will be overseen by the court system, with the courts and bankruptcy administration...
The complexities of digital assets, cross-border insolvency and competing jurisdictions could add years to the timeline.
Interview
While investors are anxious to know when they will be able to recover their funds from the now bankrupt crypto exchange FTX, insolvency lawyers warn that it could take 'decades'.
The crypto exchange, along with 130 affiliates, filed for Chapter 11 bankruptcy protection in the United States on November 11.
Insolvency lawyer Stephen Earel, partner at Co Cordis in Australia, said it would be a “huge exercise” in the liquidation process to “realize” the crypto assets and then figure out how to distribute the funds , the process can take years, if not "decades".
This is due to the complexities that come with cross-border insolvency issues and competing jurisdictions, he said.
Earel said that unfortunately FTX users are in the queue with everyone else, including other creditors, investors and venture capital backers, warning that those who have made "crypto-to-crypto exchanges" may not see distribution "for years".
Simon Dixon, founder of global investment platform BnkToTheFuture, who was an active voice in Celsius's bankruptcy proceedings, noted that anyone holding funds on FTX will become a creditor, with a committee of creditors which will be created to represent their interests.
He said the remaining assets will eventually be made available to creditors based on what remains after bankruptcy costs.
These costs could be high given the time it takes to recover funds, according to the CEO of Binance Australia, noting that this means more legal and administrative costs that eat away at returning customers.
Meanwhile, digital asset lawyer Irina Heaver, a partner at Keystone Law in the United Arab Emirates, told Cointelegraph that there are users in the Middle East who are also feeling the pain of the collapse of FTX, as the region was FTX's third largest user base.< /p>
Heaver explained that as FTX has already received a license and regulatory oversight from the new Dubai Virtual Assets Authority (VARA) regulator, this presents major complications for regulators as they already have a "huge regulatory failure" in the hands.< /p>
Heaver said that "when and if" FTX enters Chapter 11 bankruptcy proceedings, creditors' rights will be overseen by the court system, with the courts and bankruptcy administration...
What's Your Reaction?
