Tag: FTX

Recently, blockchain analysts have detected several transactions involving defunct crypto exchange FTX, hinting at a potential payout to affected customers. A recent press release confirmed these suspicions, announcing that the bankrupt exchange’s “Court-approved Chapter 11 Plan of Reorganization” will become effective on January 3, 2025.

The recovery efforts, led by John J. Ray III, the CEO of the FTX Debtors, have successfully recovered billions of dollars. The announcement noted that the plan’s effectiveness and the start of distributions reflect the success of these efforts.

FTX Customers to Receive Payouts

The initial distribution, expected to occur within 60 days of the effective date, will be limited to claim holders having relatively simple claims. By prioritizing these convenience classes, FTX can efficiently process and distribute funds to these claim holders first, while more complex or disputed claims are addressed separately.

Notably, FTX has partnered with BitGo and Kraken to assist in distributing payouts to customers and creditors in supported regions. The exchange claims these partnerships will enable the efficient and secure distribution of funds. Additional distribution service providers may be onboarded in the future.

To be eligible, customers and creditors must complete the Know Your Customer (KYC) verification, submit tax forms, and onboard with the selected distribution service providers, BitGo or Kraken. Transferred claims will only be eligible for distribution if they are processed and reflected on the official claims register maintained by the Notice and Claims Agent.

The FTX Debtors will provide instructions for onboarding with the distribution service providers on the existing customer portal. The bankrupt exchange encourages customers to complete the necessary steps to begin receiving payouts promptly.

Other Pending Bankruptcy Cases

Terraform Labs, the company behind the collapsed Terra ecosystem, is proceeding with its bankruptcy plan. As part of the reorganization plans, Terraform Labs has agreed to pay up to $442.2 million to investors and other stakeholders.

Mt. Gox, the once-prominent Bitcoin exchange that went bankrupt after a massive 2014 hack, has extended its repayment deadline for creditors to October 31, 2025. This move has relieved investors anticipating market disruptions, as earlier fears of a $4 billion Bitcoin sell-off in 2024 have now been pushed to 2025.

Celsius Network, the crypto lending platform that filed for bankruptcy in July 2022, has recently announced a payout of $127 million to its creditors following its initial $2.5 billion distribution. The expected distribution will cover approximately 60% of the creditors’ claims. Despite opposition from some creditors, Celsius is working to finalize a reorganization plan.

Gary Wang, co-founder of defunct crypto exchange FTX, has been spared from a prison sentence as prosecutors believe that he should be freed due to his swift compliance with the investigating forces after the incident, which helped them to convict others involved in the crime.

Many FTX allies have pleaded for mercy on the same grounds. Notably, only Wang has been spared as the judge believes his cooperation is quite remarkable.

Wang is Not Going Behind Bars

According to Bloomberg, U.S. District Judge Lewis A. Kaplan noted that Wang has done the right thing for himself and the defunct company by complying swiftly to expose FTX’s deeds on time.

“I’ve never seen anything quite like what happened here. Wang is entitled to a world of credit,” he said. 

His prosecutors noted that since Wang played a minimal role in the fraud, he could have easily fought against the charges. Thus, he left them in amazement when he humbly unraveled the FTX code for the investigators, making their work much easier.

Remarkably, using his programming skills, Wang worked hand-in-hand with the forces to the point of developing a software program that would help the U.S. Department of Justice (DOJ) to detect fraudsters and their activities in the American financial market.

$11 Billion Forfeiture

Although he is no longer going to be put behind bars, Wang has to suffer the consequences of his involvement in the fraud partially. Therefore, the court has ordered to forfeit $11 billion, the same amount as other FTX allies.

Notably, he has already given in to the order by agreeing to liquidate his Coinbase and Vanguard accounts and submit the proceeds to the U.S. He is also relinquishing any rights to the seized $600 million, which was initially tied to FTX and its co-founder, Sam Bankman-Fried (SBF).

During the hearing, Wang remorsefully commented, “I profoundly regret my choices. Nothing I do will ever be able to make up for those choices.”

Others Bag Prison Sentences   

The court has decided on long prison sentences for many FTX personnel involved in the fraud. SBF has been serving his 25-year prison sentence since March. A former FTX executive, Ryan Salame, began serving a seven-and-a-half-year prison sentence in May.

Meanwhile, the defunct exchange has revealed plans to reimburse its creditors by January 2025.

The bankrupt crypto exchange FTX has made several headlines since its collapse in 2022. It recently filed a lawsuit in the bankruptcy court of Delaware against Binance and its former CEO and co-founder, Changpeng Zhao (CZ). The defunct exchange wants to recover $1.8 billion, which it claims to have been fraudulently transferred to Binance.

FTX Sues Binance

The lawsuit involves a 2021 transaction that was part of a share repurchase deal worth $1.76 billion. Binance and its executives, including the co-founder CZ, sold their stakes in FTX back to the company’s co-founder, Sam Bankman-Fried (SBF). The stakes were significant, with Binance owning 20% of FTX’s international unit and 18.4% of its US-based entity.

To pay for the shares, Bankman-Fried used a combination of FTX’s native token (FTT), Binance-affiliated crypto BNB, and Binance USD (BUSD). At the time, the deal seemed like a regular legal business transaction — however, the lawsuit claims otherwise, alleging that the transaction was entirely fraudulent and, hence, invalid.

The filing mentioned that FTX may have already been insolvent from its inception and did not have enough assets to cover its debts, implying that SBF’s payment was fraudulent. As a result, the exchange’s bankruptcy estate is suing Binance and Zhao to recover the $1.8 billion, claiming the transaction was fraudulent and should be reversed.

The filing also accused CZ of posting false, misleading tweets that contributed to FTX’s collapse. It claims the tweet announcing Binance’s intention to sell FTT triggered massive withdrawals from the platform and resulted in more market panic, which impacted FTT’s decline. It believes the actions were mainly designed to destroy the rival exchange.

FTX in a Suing Spree

As part of its bankruptcy proceedings, FTX is taking legal action to recover funds to repay its creditors, which has led to multiple lawsuits. Last week, it sued Crypto.com, a Singapore-based exchange, to recover $11.4 million in assets held in Alameda Research’s account on the platform.

FTX is also seeking to recoup funds from Bankman-Fried’s influence-buying campaign. The lawsuit alleged that Scaramucci’s SkyBridge Capital investments did not benefit the defunct exchange. Its trading arm, Alameda Research, also sued Aleksandr Ivanov, founder of Waves and affiliated entities, to recover at least $90 million.

As FTX’s Estate executes its bankruptcy plan, the crypto industry anticipates more legal battles, targeting individuals and entities that received funds from FTX before its collapse.

The bankrupt crypto exchange, FTX, has filed a lawsuit against Singapore-based Crypto.com, seeking to recover $11.4 million in assets held in Alameda Research’s account created in the Crypto.com platform. While the dispute is already within the FTX bankruptcy case in the United States, it requires the court’s hearing to resolve the conflict between the parties.

Why Sue Crypto.com?

According to FTX claims, its trading arm, Alameda, had funded and controlled the account housing the fund. Following the exchange’s November 2022 bankruptcy filing, Crypto.com locked the account, withholding the said assets contained in it. Despite repeated requests, it refused to cooperate with FTX’s demands for asset return, prompting the lawsuit.

Surprisingly, FTX acknowledged that Crypto.com also maintained two accounts on its platform, holding $18.63 million. The lawsuit alleged the Singapore-based exchange violated bankruptcy laws by retaining estate property without authorization.

FTX wants the court to dismiss all of Crypto.com’s claims associated with funds that are custodied by the bankrupt exchange unless it first returns all Alameda assets. The exchange further claimed in the filing that successful recovery of the funds would significantly aid its bankruptcy proceedings.

Meanwhile, after being sued by FTX, the Singapore-based exchange initiated a lawsuit against the U.S. Securities and Exchange Commission (SEC), aligning with other “industry peers.” It claims the legal move aims to challenge unauthorized regulatory actions and safeguard the future of the crypto market.

FTX’s Collapse Triggers Several Lawsuits

Since the fall of FTX, different filings associated with the scandal have surfaced. The defunct exchange has recently initiated a lawsuit against imprisoned Ryan Salame, former co-CEO of its Bahamian subsidiary, seeking reimbursement of approximately $98.8 million in cash and crypto. The lawsuit alleged that Salame intentionally facilitated the misappropriation of customer assets by FTX executives.

Nikolas Gierczyk, a California-based FTX customer, has also filed lawsuit against Olympus Peak hedge fund, alleging breach of contract. He sold his $1.59 million FTX claim to Olympus Peak for $930,000, retaining rights to additional recoveries. With FTX’s bankruptcy plan approved, the firm may receive more, but allegedly refused to honor Gierczyk’s residual rights.