The year 2023 will be remembered for a significant number of cryptocurrency bankruptcy filings, with FTX creditors seeking to recover over $8 billion.
FTX Bankruptcy Case Process May Last for Years
However, legal experts think this case could drag on for years due to the large number of individuals and companies fighting for the remaining assets.
Alan R. Rosenberg, a partner at Markowitz Ringel Trusty & Hartog, suggests that the case, filed last November, will last longer than other crypto bankruptcies such as Celsius and BlockFi.
This is primarily because FTX filed multiple clawback claims or estoppel actions in an attempt to recover the money it had paid in the weeks and months before the bankruptcy.
“Given that some of these transfers are probably very significant, and some of them are to large organizations that I'm sure are very capable of defending themselves, it's very possible that some of these will continue for a long time,” Rosenberg said in an interview.
These types of claims are usually settled out of court and do not go to court because it is usually cheaper to settle. However, settlement negotiations can also be time-consuming.
While FTX is trying to recoup money lavishly spent by its former management, it is also fighting a $24 billion claim from the Internal Revenue Service, which claims the crypto exchange failed to pay all its taxes.
*This is not investment advice.