Cryptocurrency Exchange

FTX saga is expected to drag on for a while

As per market experts’ estimates, resolving the FTX collapse case will require a considerable amount of time. Even though 2023 has witnessed a number of instances of cryptocurrency failure, FTX stands out because a purportedly enormous number of FTX creditors are seeking to redeem over $8 billion.

Alan R. Rosenberg, a partner at Markowitz Ringel Trusty & Hartog, predicts that the November 2022-filed case will require a significantly longer duration to resolve in comparison to the Celsius and BlockFi cases. According to him, this is due to the fact that the claims involve a number of legal proceedings concerning the redemption of funds that were disbursed sometime prior to the ultimate collapse.

He said that certain transfers were significant, as were some involving bigger players who he believes can handle the situation. However, time will continue to be a crucial element. According to his understanding, such issues are usually resolved amicably by the parties involved, without the intervention of the courts.

In the meantime, FTX is determined to recover the funds that its former founder misappropriated. There is also the matter of going up against a claim to the tune of $24 billion being made by the Internal Revenue Service in lieu of unpaid taxes.

FTX has been crucial in resolving issues with Genesis, a crypto-based corporation that is still dealing with its own bankruptcy. It is known to have been a primary creditor in the matter of Alameda Research, an FTX subsidiary trading company.

The same issues FTX and Alameda face remain unresolved, such as a $1 billion lawsuit brought against ByBit, a cryptocurrency exchange. FTX is returning $71 million from its charity section and payments made to numerous celebrities associated with promotional operations. In addition, there are cases involving illicit transactions, with FTX currently suing the ex-CEO, Sam Bankman-Fried, his parents, and certain senior officials.

As per Rosenberg, it is possible for more problems to crop up there in the upcoming times. It could involve FTX-related investments and donations made to politicians. The list, as per his understanding, maybe almost endless, with some giving in and some taking the fight on.

According to him, the issue is the calculation procedure involved in determining the value of crypto against the time factor. A case in point in this regard is the 2014 bankruptcy of a cryptocurrency startup, HashFast. It was about a person obtaining a certain quantity of cryptocurrency and its worth increasing over time.

A further complicated factor to deal with is how creditors are paid, either via crypto or fiat money. Presently, there are no set rules on the issue. He, however, is optimistic about the fact that the rules will soon be set in place, considering the mass acceptance of crypto.

Lili Chuang

Lili Chuang is a finance professional with an experience of over a decade in news writing. Recently, she has joined the CoinNewSpan team as a sub-editor. She is a firm believer of blockchain technology and cryptocurrencies. She curates contents regarding the latest insights into the crypto-market. In her free time, she loves to explore new places and connect with influential people of crypto space.

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