Analyst: FTX Legal Battle Set to Extend Over Years in $8 Billion Creditor Fight
Now-defunct cryptocurrency exchange FTX is embroiled in a legal battle that could extend over several years as creditors seek to recover over $8 billion.
The case, filed in November, involves multiple parties fighting over the remaining assets, making it more complex and time-consuming than other crypto bankruptcies, according to Alan R. Rosenberg, a partner at Markowitz Ringel Trusty & Hartog.
Rosenberg said he believes the FTX case will drag on for an extended period due to the litigation of various clawback claims.
These claims aim to recover funds that FTX paid out in the period leading up to its insolvency.
Given the significance of these transfers and the involvement of large organizations capable of defending themselves, the case could be protracted.
While these types of claims are typically resolved through settlements outside of court, negotiating such settlements can be time-consuming.
In addition to fighting against clawback claims, FTX faces a substantial $24 billion claim from the Internal Revenue Service (IRS) for unpaid taxes.
This further complicates the bankruptcy proceedings.
FTX has already settled mutual adversary complaints with Genesis, a crypto firm also undergoing bankruptcy proceedings.
However, unresolved complaints against FTX and Alameda Research, an FTX-affiliated trading firm, include a $1 billion lawsuit against crypto exchange ByBit.
FTX is also attempting to recover $71 million from its philanthropic arm and seeking reimbursements from multiple celebrities for promotional activities.
Furthermore, the bankruptcy estate has identified potentially fraudulent transactions, leading to FTX suing its former CEO, Sam Bankman-Fried, and other former executives, as well as
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