FTX’s sudden and drastic collapse has resulted in shivers of horror spreading throughout the crypto ecosystem. The Crypto exchange filed for Chapter 11 bankruptcy protection in the US on November 11.
Multiple FTX Group companies are involved in the US bankruptcy proceedings, with probably over 1 million creditors, all of which are struggling now in their own ways.
Lawyers Provide Advice
Amidst any bankruptcy proceeding, the major concern that arises is from the investors, who are keen to know when they will be able to retrieve their money. The FTX case is no exception.
Insolvency lawyer Stephen Earel, a partner at Co Cordis in Australia, said it will be an “enormous exercise” in the liquidation process to “realize” the crypto assets and then figure out how to divide the funds, with the process potentially taking years, if not decades. This is because cross-border insolvency issues are complicated and there are several competing jurisdictions.
Further, Simon Dixon, founder of global investing platform BnkToTheFuture, stated that everybody holding funds on FTX will become creditors, and a creditors committee will be formed to represent their interests. Depending on what is left over after bankruptcy fees, creditors will eventually have access to the remaining assets.
Irina Heaver, a partner at Keystone Law in the UAE and a lawyer for digital assets, claimed that since the Middle East had the third-largest FTX user base, users there are also suffering from the company’s collapse.
The recently established Dubai Virtual Assets Authority regulator (VARA) has already granted FTX a license and regulatory oversight; this raises significant challenges for the regulators because they are already dealing with a “huge regulatory failure.”
People who have suffered financially have been advised by Heaver’s to seek legal advice and collaborate with “other affected parties.”
FTX’s Plea For Help
The now-bankrupt organization, headed by new FTX Group CEO John J. Ray III, called upon its associates to “take all measures” needed to acquire the funds so that they could be handed back to the estate supervising FTX’s bankruptcy.
Source: https://coinpedia.org/news/lawyers-warn-it-could-take-decades-to-get-funds-out-of-ftx/