While investors are eager to know when they will be able to get their funds back from the now-bankrupt crypto exchange FTX, insolvency lawyers warn it could take “decades.”
The crypto exchange, along with 130 affiliates filed for Chapter 11 bankruptcy protection in the United States on Nov. 11.
Insolvency lawyer Stephen Earel, partner at Co Cordis in Australia said it will be an “enormous exercise” in the liquidation process to “realize” the crypto assets then work out how to distribute the funds, with the process potentially taking years, if not “decades.”
This is due to the complexities that come with cross-border insolvency issues and competing jurisdictions, he said.
Earel said unfortunately FTX users are in the queue with everyone else including other creditors, investors and venture capital funders, warning those that have made “crypto to crypto trades” may not see a distribution “for years.”
Simon Dixon, founder of global investment platform BnkToTheFuture who has been an active voice in the Celsius bankruptcy proceedings noted that anyone who holds funds on FTX will become creditors, with a creditors committee to be established to represent their interests.
He stated that the remaining assets will eventually be available to creditors depending on what remains after bankruptcy costs.
These costs could be high given the time required to recover funds, according to Binance Australia CEO, noting that this means more legal and administrative fees that eat into customers' return.
Meanwhile, Digital Assets Lawyer Irina Heaver, Partner at Keystone Law in UAE told Cointelegraph that there are users in the Middle-East also feeling the pain from the FTX collapse, as the region was the third largest user base of FTX.
Heaver explained that as FTX already received a license and regulatory supervision from the newly formed Dubai’s Virtual Assets Authority regulator (VARA), it presents major complications for the regulators as they already have a “huge regulatory failure” on their hands.
Heaver said only “when and if” FTX moves into Chapter 11 bankruptcy procedures, creditors’ rights will be overseen by the legal system, with courts and bankruptcy administrators involved.
Heaver’s advises people with substantial losses due to the FTX collapse to get legal advice and get together with “other injured parties.”
The recent FTX collapse has had significant consequences for investors across the world. It was recently revealed that the bankrupt cryptocurrency exchange may have “more than 1 million creditors.” According to a Reuters article published on Nov. 20 the bankrupt cryptocurrency exchange owes its biggest 50 creditors “nearly $3.1 billion.”
The Singapore Police Force has warned investors to be weary of fake websites claiming they can help them recover funds from the now-bankrupt cryptocurrency exchange FTX.
On Nov. 19, the police issued a warning about a website claiming to be hosted by the United States Department of Justice that prompts FTX users to log in with their account credentials, local news agency Channel News Asia reported. The website, which was not identified, targets local investors affected by the FTX collapse, claiming that customers “would be able to withdraw their funds after paying legal fees.”
The police said the website was a phishing scam designed to fool unsuspecting users into giving away their private information.
Local authorities have also warned against fake online articles that promote cryptocurrency auto trading programs in the country, which appear to have proliferated recently. These articles often feature prominent Singaporean politicians, such as parliament speaker Tan Chuan-jin.
Although this isn’t the first time Singapore’s police have issued public warnings against crypto scams, recent developments in the industry have made investors more vulnerable to attacks. An estimated 1 million investors and creditors have been affected by FTX’s bankruptcy. Collectively, they face billions in losses.
Despite promoting itself as a hub for cryptocurrency and Web3 innovation, Singapore has pursued stricter regulations around retail trading and self-hosted wallets. The city-state has repeatedly warned investors that digital assets are highly speculative and has even banned crypto advertising on social media.
Nevertheless, several crypto firms have applied for licensing in the city-state, with stablecoin issuers Circle Internet Financial and Paxos recently gaining approvals from the Monetary Authority of Singapore.
Metaverse-backer Bob Iger has announced a surprise return to his former role as CEO of Disney, taking over from now-former CEO Bob Chapek.
While Iger is most well known for serving 15 years as the CEO of the global entertainment conglomerate, the Disney executive became known in the crypto community after becoming a director, adviser and investor in Genies, a digital avatar platform running on Dapper Labs’ Flow blockchain.
“Thrilled to be joining the Genies Board of Directors to help Akash Nigam and company empower humans to create the 'mobile apps of Web3': avatar ecosystems,” Iger said at the time.
Iger was still at Disney as an executive and board chairman when the company filed for a metaverse-related patent on Dec. 28.
The patent was for a “virtual-world simulator in a real-world venue," and according to the filing, would allow visitors to Disney theme parks to use mobile phones to generate and project personalized 3D effects onto nearby physical spaces, such as walls and other objects.
However, Disney said at the time there were “no current plans” to use the “virtual-world simulator” patent, and the company has yet to announce any products related to the patent.
According to the Hollywood Reporter, Iger’s return will reportedly only be temporary, though, with Iger only agreeing to serve as Disney’s CEO for the next two years.
During his new term as CEO, Iger will reportedly work with the board to set the strategic direction for the company and work to develop a successor.
In his absence, Disney has continued to work toward projects involving the metaverse, nonfungible tokens (NFTs) and blockchain throughout the year.
In September, Disney started hiring a principal counsel to work on transactions involving NFTs, the metaverse, blockchain and decentralized finance (DeFi).
Specifically seeking someone to provide “full product life cycle legal advice and support for global NFT products” and ensure they comply with all current laws and regulations on United States soil and internationally.
This Daily Dose was brought to you by Cointelegraph.