bankruptcy Archives - Coin Engineer

$2.5B at Risk: FTX Users Must Act Before June 1

Yigit Taha OZTURK — Sun, 06 Apr 2025 14:00:23 +0000

Around 392,000 users of the collapsed crypto exchange FTX may lose their claims totaling $2.5 billion due to not starting the mandatory KYC process, according to a court filing dated April 2.

Originally due on March 3, 2025, the KYC Commencing Deadline has now been extended to June 1, 2025, offering a final window to secure their funds.

Claims Will Be Disqualified

“If KYC is not commenced by the deadline, such claim shall be disallowed and expunged.” — U.S. Bankruptcy Court, Delaware

Claims under $50,000 may account for $655 million, while larger claims exceed $1.9 billion, making the total at-risk amount over $2.5 billion.

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The next repayment round is scheduled for May 30, 2025, where $11 billion is expected to be distributed to high-value creditors.

How to Complete KYC

Some users have reported issues with the KYC portal. Here’s how to fix it:

Email support@ftx.com to get a ticket number.
Log in to the FTX support portal.
Create an account and re-upload KYC documents.

An April 5 update by Sunil, a Customer Ad-Hoc Committee member, confirmed that users can restart the verification process.

FTX Repayments and Market Sentiment

FTX’s first repayments were made in February 2025, with $1.2 billion returned via FTX Digital Markets. Though not a market-moving event, experts believe it signals recovery in the crypto space.

Bitget Wallet COO Alvin Kan told Cointelegraph that these repayments could lead to a “significant portion” of funds being reinvested into cryptocurrencies.

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

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Three Arrows Increases Its FTX Claim to $1.53 Billion!

Yigit Taha OZTURK — Fri, 14 Mar 2025 09:00:34 +0000

The bankrupt crypto hedge fund Three Arrows Capital (3AC) has received approval to increase its claim against the collapsed exchange FTX to $1.53 billion. The U.S. Bankruptcy Court reviewed 3AC‘s request and approved the amended filing, stating that it aimed to protect creditors’ rights.

Legal Battle Between 3AC and FTX

In a case heard in the Delaware Bankruptcy Court, Chief Judge John Dorsey rejected objections from FTX creditors. The FTX side argued that 3AC‘s claim was untimely and an attempt to delay the process. However, the court ruled that FTX‘s delayed response in providing necessary documents had caused the delay.

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3AC initially filed a $120 million claim in June 2023. Later, in November 2024, it increased this amount to $1.53 billion, alleging that FTX had engaged in unjust enrichment and failed to fulfill its obligations. According to 3AC, FTX liquidated $1.33 billion of its funds in 2022, causing significant financial damage.

Current Status of the FTX and 3AC Case

FTX objected to 3AC‘s amended claim, arguing that it was filed too late and lacked sufficient information. However, the court determined that 3AC‘s delays resulted from FTX withholding critical records, leading to the approval of the increased claim.

As the FTX bankruptcy proceedings continue, the exchange has also filed lawsuits against SkyBridge Capital, Binance, and Waves to recover lost funds. FTX is actively pursuing legal action to reclaim assets linked to former CEO Sam Bankman-Fried‘s past financial decisions.

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FTX to Begin Distributing Payments in 2025

Yigit Taha OZTURK — Tue, 17 Dec 2024 10:11:35 +0000

FTX debtors have announced that the reorganization plan enabling customer repayments will take effect on January 3, 2025, marking a significant step in the exchange’s bankruptcy proceedings.

The first group of FTX creditors can expect their repayments within 60 days of January 3, 2025, under certain conditions. Kraken and BitGo will assist in distributing recovery payments to users. A third undisclosed distributor will also be involved.

FTX CEO John J. Ray III urged customers to complete the necessary steps to receive distributions on time. Under the bankruptcy plan, priority will be given to “convenience classes,” which include claims of $50,000 or less.

Bankruptcy Overview

FTX filed for Chapter 11 bankruptcy protection in November 2022 following a liquidity crisis and the resignation of then-CEO Sam Bankman-Fried. The case led to indictments of several executives, including Bankman-Fried, who is currently serving a prison sentence.

In October 2023, the court approved a plan to allow FTX debtors to repay customers up to 119% of their claimed account values.

FTX’s estate has taken legal action to recover funds used for political contributions and has pursued lawsuits against firms holding assets linked to the exchange. These reclaimed funds are expected to aid in user repayments.

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Celsius is Attempting to Restructure After Bankruptcy!

Orhan — Thu, 28 Nov 2024 15:00:03 +0000

Celsius, a name that has resonated in the cryptocurrency world due to its bankruptcy, has made headlines again with its efforts to restructure. The company announced a new payment round totaling $127 million to eligible creditors, aiming to fulfill approximately 60% of claims listed in its bankruptcy filing. This move is not only a financial step but also a crucial one for rebuilding trust in the sector and ensuring transparency in the legal process.

$127 Million Second Payment Plan

According to Celsius’ statement, eligible creditors will receive 60.4% of their claims in cash or cryptocurrency. Bitcoin’s value for the payment process was set at a weighted average price of $95,836.23. Creditors who cannot receive liquid cryptocurrency payments will be offered cash as an alternative. This flexible approach highlights a carefully designed solution to address the complex financial claims during the bankruptcy proceedings.

Roots of Celsius’ Collapse

Celsius declared bankruptcy in 2022 after revealing a $1.2 billion deficit in its balance sheet. The restructuring process began in November 2022, and by January 2023, the company completed its first major payment round. During that phase, $2 billion worth of cryptocurrency was distributed to 171,672 creditors, covering 57.65% of claims.

The downfall of Celsius was attributed to its risky business model and poor liquidity management, serving as a cautionary tale for the crypto sector. It underscored the regulatory gaps in the industry and highlighted the need for greater transparency in managing customer funds.

CEO Alex Mashinsky’s Legal Troubles

Former Celsius CEO Alex Mashinsky faces severe allegations following the company’s financial collapse. He has been accused by the SEC, FTC, and CFTC of misleading customers and committing fraud.

Mashinsky could face up to 115 years in prison if convicted. Earlier this month, a U.S. court rejected his request to dismiss two fraud charges, further complicating his legal battle.

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Major Crypto Platform Delio’s Bankruptcy Officially Confirmed

Orhan — Sat, 23 Nov 2024 18:00:21 +0000

South Korea’s Leading Crypto Platform Delio Declares Bankruptcy with $174M Debt

Delio, one of South Korea’s prominent cryptocurrency platforms, has officially filed for bankruptcy, citing a debt of $174 million. The collapse has impacted approximately 2,800 investors and sent shockwaves through the country’s financial markets.

Founded in 2018 as the first official Virtual Asset Service Provider (VASP) in South Korea, Delio’s downfall is closely tied to the FTX exchange’s 2022 collapse. A significant portion of its customer assets was managed through FTX, and when FTX dramatically went under in November 2022, Delio was unable to recover these funds. This led to a complete halt of asset withdrawals starting June 13, 2023.

Legal Troubles and CEO’s Role

Delio’s CEO, Jeong Sang-ho, is currently facing serious legal charges, including fraud, embezzlement, and breach of trust. During a court hearing in June, Sang-ho controversially claimed that customer deposits on the platform were not “principal-protected.” Following recommendations from the Financial Intelligence Unit (FIU), Sang-ho was removed from his position on September 1, 2023. His legal battles are ongoing.

Investor Compensation Timeline

The court has granted affected investors until February 21, 2025, to file claims. The first creditors’ meeting is scheduled for March 19, 2025, where decisions regarding the $174 million in customer claims will be addressed.

Haru Invest Connection

Adding to the complexity, Delio’s sibling company, Haru Invest, which ceased operations on the same day as Delio, also declared bankruptcy on November 20, 2024.

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When Will FTX Make User Payments?

Yigit Taha OZTURK — Fri, 22 Nov 2024 13:00:37 +0000

FTX has confirmed that its restructuring process is expected to be completed by the beginning of next year, with payments to creditors and users anticipated shortly thereafter.

According to a statement released Thursday, FTX CEO John J. Ray III noted, “This timeline reflects the experience and ongoing efforts of the professional team that has recovered billions of dollars on behalf of creditors and customers.”

FTX also stated it will finalize the arrangements for fund distribution with special distribution agents by the end of December and will soon announce a definitive date for the payouts.

Customers wishing to receive payments must create an approved account with a distribution agent, complete KYC verification, and submit the necessary tax documentation before the first distribution date.

FTX expects to pay customers between 129% to 146% of the fiat value of their claims as of the bankruptcy filing date. However, many creditors argue that payments should be made in cryptocurrency due to the market’s rise.

The company’s restructuring team has claimed to have received overwhelming support from creditor classes, with more than two-thirds of claims participating in the process.

FTX’s total liabilities to its customers are reported to be approximately $8 billion. In April, it was revealed that CEO John J. Ray charges an hourly rate of $1,575.

Meanwhile, the IRS claims that FTX owes nearly $24 billion in taxes, a sum more than three times the value of the company’s current assets.

Former CEO Sam Bankman-Fried was convicted of seven charges, including fraud and conspiracy, and was sentenced to nearly 25 years in prison.

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California Revokes Crypto Lending Company BlockFi’s License

Yigit Taha OZTURK — Fri, 08 Nov 2024 19:00:10 +0000

California revoked the license of the bankrupt crypto lending company after a two-year investigation. On November 7, the California Department of Financial Protection and Innovation (DFPI) announced that the company’s license was suspended in November 2022. After two years of audits, the license was permanently revoked.

The company agreed to the license revocation and committed to discontinuing unsafe practices. DFPI reported that the company violated the California Financing Law (CFL). BlockFi gave loans without considering borrowers’ repayment capacity and charged interest before the loans were disbursed. Additionally, the company failed to provide credit counseling and did not meet credit reporting obligations.

DFPI Commissioner Clothilde Hewlett said, “While we encourage innovation in our financial markets, companies must comply with laws and protect consumers to continue operating.”

The bankrupt company will pay a $175,000 fine imposed by California, but the payment has been postponed to prioritize consumer repayments. In May 2024, the company shut down its web platform, and customers can no longer access it.

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The bankruptcy process began after Sam Bankman-Fried‘s FTX exchange collapsed. The company had significant exposure to FTX and its affiliates. BlockFi filed for bankruptcy due to a $400 million credit line with FTX US. Additionally, FTX was one of BlockFi‘s largest unsecured creditors.

By 2024, the company is estimated to owe up to $10 billion to more than 100,000 creditors.

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Mt. Gox Initiates Transfers This Week

admin — Mon, 22 Jul 2024 19:00:08 +0000

Mt. Gox, which sent over 40,000 Bitcoins to various exchanges in recent weeks, made a quick start to Monday as well. The exchange made a test transfer, which could be a harbinger of large transfers.

Mt. Gox, which started Bitcoin distributions in early July, made a test transaction that could be a harbinger of another major transfer. 0.021 BTC was sent from the exchange’s account to an unknown address. (Arkham later stated that this address belongs to the Bitstamp exchange) Mt. Gox had previously made small test transfers before large transfers of thousands of BTC.

The Mt. Gox bankruptcy administration, which made transfers to BitBank and SBI VC Trade exchanges in recent weeks, also made its first distribution to the Kraken exchange last week. Kraken exchange confirmed the distributions with emails sent to its customers.

Kraken exchange announced that it will start distributions to its creditors who are due within 7 to 14 days, although the deadline is 90 days.

Bitcoin Down…

On the other hand, Mt. Gox’s test transfer also caused a decline in the Bitcoin price. The largest cryptocurrency, which was around $67,800 before the transfer, experienced a decrease of around $500-600.

The amount of Bitcoin in Mt. Gox’s hands has decreased to 90,000 after the distributions.

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Mt. Gox CEO Mark Karpeles Calms Fears

admin — Tue, 28 May 2024 13:00:25 +0000

Large Bitcoin transfers from Mt. Gox wallets to unknown addresses triggered panic among investors, leading to a sell-off that pushed the Bitcoin price down from above $70,000 to around $67,400.

In an attempt to ease concerns, Mt. Gox’s former CEO, Mark Karpeles, clarified that the transfers were not indicative of an immediate Bitcoin sale. He explained that the transfers were part of the ongoing process of managing Bitcoin reserves for the upcoming creditor repayments scheduled for this year.

Mt. Gox Official Statement Reinforces

An official statement from Mt. Gox further reinforced Karpeles’s remarks, emphasizing that no direct BTC or BCH repayments have been made and that there are no plans for immediate sales of these assets. The Rehabilitation Trustee, currently overseeing the Bitcoin and Bitcoin Cash, assured users that the funds are being held securely.

Following the reassuring statements from Karpeles and Mt. Gox, the Bitcoin price started to recover, climbing back to around $68,500 at the time of writing.

Mt. Gox Background: A Longstanding Saga

In 2014, Mt. Gox, a Japanese cryptocurrency exchange, filed for bankruptcy after hackers stole 850,000 Bitcoins, leaving many investors with substantial losses.

After years of legal battles, an old Mt. Gox wallet containing 200,000 Bitcoins resurfaced, offering a glimmer of hope for creditors. The Tokyo District Court appointed a trustee to oversee the distribution of these funds to affected users.

The distribution plan is designed to minimize the impact on the Bitcoin market by spreading out the repayments over time. This approach aims to prevent a sudden surge of supply that could trigger another price crash.

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