FTX anticipates generating billions of dollars solely from legal claims and litigation amid its bankruptcy and organizational reorganization.
FTX anticipates generating billions of dollars solely from legal claims and litigation amid its bankruptcy and organizational reorganization. A Wall Street Journal report indicates that the troubled cryptocurrency exchange is embroiled in over a dozen lawsuits.
FTX to Generate Billions From Ongoing Lawsuit
Presently, insolvent FTX is embroiled in litigation alleging $8 billion in fraud, which precipitated the exchange’s asset loss in the majority. Nevertheless, it intends to recoup every penny expended through the filing of claims in the lawsuit. If the ongoing legal disputes are resolved in favor of the indebted exchange operator, FTX could recover billions of dollars.
In addition to the ongoing and present legal claims, the cryptocurrency exchange intends to initiate additional legal proceedings in 2024, according to a report by the WSJ.
Numerous analysts, including Markowitz Ringel Trusty & Hartog partner Alan R. Rosenberg, estimate that the legal battles surrounding FTX will continue for an extended period, potentially even longer than the bankruptcy proceedings of other cryptocurrencies such as Celsius and BlockFi.
FTX attempts to recover money it paid out in the weeks and months preceding its insolvency through a series of avoidance actions and claims.
International creditors and Genesis, a former significant creditor of FTX-affiliated trading firm, Alameda Research, with whom FTX had resolved adversarial disputes, have also reached settlements. In settlement of the litigation, Genesis consented to obligate FTX with a substantial sum of $175 million.
The $8 billion Debacle
Following a month-long legal dispute, the CEO of FTX was found guilty of the fraudulent allegations brought against him. The trial occurred precisely one year after the troubled cryptocurrency exchange declared bankruptcy, which precipitated a swift corporate collapse that impacted financial markets and, as reported by Reuters, erased an estimated $26 billion in personal wealth.
A favorable resolution in the ongoing and forthcoming legal proceedings concerning the cryptocurrency trading exchange would result in a recovery of billions for the exchange and potentially reinstate and successfully restructure FTX’s operations. Additionally, it would foster improved investor sentiment and stimulate a greater propensity for risk among its users.
