FTX bankruptcy could go on for years, legal expert says

FTX is facing a bankruptcy case that could drag on for years, according to legal expert Alan R. Rosenberg. The case, filed in November, involves multiple clawback claims as FTX attempts to recover money it paid out before becoming insolvent. These claims typically result in settlements outside of court, but negotiating the settlement can take time. In addition to the clawback claims, FTX is also fighting against a $24 billion claim from the Internal Revenue Service for unpaid taxes. The bankruptcy proceedings also involve lawsuits against FTX’s former leadership, including ex-CEO Sam Bankman-Fried and his parents. Rosenberg believes there may be more lawsuits to come, potentially involving FTX investments and political donations. One challenge in these cases is determining how to value cryptocurrency over time, as there is no definitive case law on the matter. Another question is how creditors should be paid, whether in crypto or fiat money. Rosenberg hopes that these high-profile crypto bankruptcies will lead to the establishment of rules and mechanisms for distributing cryptocurrencies in insolvency cases.