FTX Creditor Claim Guide: A New Round of Liquidation is About to Begin

The FTX case, as the largest bankruptcy liquidation case in the world today and the first global cryptocurrency asset bankruptcy case, has garnered significant attention from global investors regarding its progress. The handling of this case will serve as an important reference for managing the bankruptcy of multinational cryptocurrency enterprises and will have a profound impact on judicial practice for a considerable period of time in the future.

Since the collapse of FTX, creditors have gone through multiple rounds of debt claims. Due to disputes over the execution of the liquidation plan, and the inability to complete the liquidation of FTX's bankrupt assets in the short term, creditors face a long and difficult road to repayment. Currently, the FTX liquidation entity and the claims portal have been established and opened, and creditor repayment is about to begin.

Background of the FTX case:

FTX was founded in 2019 and was once a top cryptocurrency exchange on par with Binance, headquartered in the Bahamas, with its main business focused in the US. FTX has hundreds of affiliated companies, with clients around the world, and its valuation once reached $32 billion.

At the end of 2022, media reports revealed that Alameda Research's assets were heavily reliant on FTT tokens, triggering market panic. Under the dual pressure of FTT's price plummeting and users withdrawing their funds, FTX struggled to survive and ultimately declared bankruptcy.

Due to FTX having substantial assets in both the Bahamas and the United States, courts in both countries have intervened in the liquidation process. The Supreme Court of the Bahamas has appointed joint provisional liquidators to handle the liquidation of FTX Digital and its affiliated companies, while the Delaware court in the United States has placed FTX Trading Limited and its associated entities into bankruptcy proceedings. Currently, the joint provisional liquidators have established a dedicated FTX creditor claim submission website to uniformly accept claims from customers, non-customers, and assignees, with a deadline of May 15, 2024.

Creditor Claim Submission Guide:

1. Visit the FTX creditor claim and compensation portal to register a claim account.

For first-time visitors, please click the blue box in the upper right corner to register an account, filling in your name, email, country/region, contact information, and other details. It is recommended to use a reliable email, as a verification code will be required for subsequent logins.

Note to correctly select the type of claimant: individual customer, institutional customer, or non-customer creditor. Individual users select individual customer, while companies and other legal entities select institutional customer, and other creditors select non-customer creditor.

2. Register creditor and customer account details

For FTX users, simply submit the registration information of your FTX account to link the accounts. After linking, carefully verify that the displayed balance and assets match your FTX account. Once confirmed, click to confirm, and the related assets will enter the claims process.

If there are objections to the displayed assets, additional materials must be provided to the liquidator through the objection process. It is recommended to consult professionals to prepare the required declaration materials, especially for non-client creditors who need to submit qualified claims and evidence.

The assignor of the claims from the FTX bankruptcy must submit complete proof of assignment. If the claims are secured, the guarantee documents should also be submitted to avoid the guarantee becoming invalid.

After completing the material submission, proceed with KYC identity verification to complete the debt claim declaration.

For investors who have already declared their claims on the KROLL platform, declaring again on the Bahamas platform will produce two legal effects:

1. is regarded as a withdrawal of claims and demands against FTX Trading Ltd. and other companies based on U.S. bankruptcy law;

2. Bankruptcy claims shall be under the jurisdiction of the Bahamas court and handled in accordance with Bahamian law.

It should be noted 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, filing in the Bahamas or the United States will not lead to substantive unfairness. However, the choice of applicable law and jurisdiction may affect the recognition of claims, the proportion of recognition, and the handling of objections, which relates to the interests of creditors. It is recommended to consult a professional legal team before making a choice.