FTX Creditor Claim Guide: How to Protect Your Rights in the New Round of Liquidation

With the FTX case's actual controller sentenced to 25 years in prison, this globally sensational collapse of the cryptocurrency exchange comes to a temporary end. However, for many creditors, the most concerning issue is how the bankruptcy liquidation process will proceed, as it directly relates to whether they can effectively recover their funds.

As one of the largest bankruptcy liquidation cases in the world today, every step of the FTX case has attracted significant attention. Its approach to handling the bankruptcy of multinational cryptocurrency companies is likely to become an important reference for future related cases.

Currently, the liquidation entity and claims portal of FTX have been established and opened, and the repayment process for creditors is about to start. This article will provide a detailed introduction to the specific steps and precautions for FTX creditor claims, hoping to assist creditors in protecting their rights.

Background of the FTX Case and the Liquidation Team Situation

FTX was once a top cryptocurrency exchange on par with Binance, headquartered in the Bahamas, with its main business focused in the United States. After completing its Series C funding, FTX's valuation once reached $32 billion. However, at the end of 2022, FTX suddenly collapsed, triggering market panic.

Due to the complex legal structure of FTX, its bankruptcy proceedings are taking place simultaneously in the Bahamas and the United States. In November 2022, the Supreme Court of the Bahamas appointed a provisional liquidator to initiate the liquidation process of FTX Digital. In February 2023, the Delaware court in the United States also recognized the provisional liquidation in the Bahamas.

At the end of 2023, the Supreme Court of the Bahamas appointed an official liquidator (JOL) to liquidate the assets of FTX Digital and its affiliated companies and compensate creditors. Currently, JOL has established a dedicated FTX creditor claim website to process the claims of customer creditors, non-customer creditors, and assigned creditors in a unified manner. The deadline for claims is May 15, 2024.

FTX Creditor Claim Submission Steps

1. Register Claim Account

First, creditors need to access the FTX creditor claim website and register an account. During registration, you need to fill in personal information and select the correct type of claimant: individual customer, institutional customer, or non-customer creditor. It is recommended to use a reliable email for registration, as subsequent logins will require an email verification code.

2. Register creditor and customer account information

For individual or institutional clients of FTX, it is necessary to submit the account registration information on FTX to link the FTX account. After the linking is completed, the system will display the account balance information, please carefully verify whether it is consistent with the actual situation. If there are no objections, you can confirm directly; if there are objections, additional materials must be provided through the objection procedure.

For non-client creditors or assigned FTX bankruptcy claims, it is necessary to submit the corresponding evidence, vouchers, or assignment proof of the claims. If the claims involve guarantees, relevant vouchers must also be submitted.

Finally, completing the KYC identity verification process means that the debt declaration is complete.

Explanation about Duplicate Declaration

For investors who have already declared their claims on the KROLL platform in the United States, if they choose to re-declare on the Bahamas platform, the following legal effects will occur:

1. Considered as the withdrawal of the claim against FTX Trading Ltd. and its affiliates under U.S. bankruptcy law.
2. The jurisdiction of the debt claim is transferred to the Bahamian court, and subsequent procedures will be conducted according to Bahamian law.

It is worth noting that the United States and the Bahamas have reached a preliminary consensus on the liquidation of bankrupt assets, which will be distributed as a whole after liquidation. Therefore, the choice of jurisdiction for filing will not affect the final compensation ratio but may impact specific procedures such as the recognition of claims and the handling of objections.

Creditors are advised to consult a professional lawyer for opinions before making a choice, in order to fully protect their rights.