Roughly two weeks after FTX filed for bankruptcy, its customers are losing hope they will ever see their money again
Why FTX Account Holders Are Unlikely To Get Their Money Back
FTX’s claim that it was hacked diminishes the likelihood that users will recover their money, legal and banking experts say. Without a clear understanding of how much cash FTX has left—and where it’s located—customers could be waiting years to recover their lost funds, and it’s possible none is returned.
Once the darling of the crypto world, FTX filed for bankruptcy in early November after a run on deposits caused a liquidity crisis. The firm’s collapse has sparked investigations by the Securities and Exchange Commission and the Justice Department in the U.S. and by authorities in the Bahamas.
But customers who trusted FTX’s platform are likely at the back of the queue for receiving whatever assets a bankruptcy judge can extract from the company. As the firm undergoes its bankruptcy proceedings, U.S. law allows the court to rearrange priorities based on equitable principles, meaning creditors will likely take first priority while investors in the company are second and account holders are last.
A litany of other legal issues could drag the case on for years, including avoidance litigation, fraudulent transfer litigation, preference litigation and insurance litigation, Rosenberg adds.
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