Written by: Xiao Sa Team
In the article a few days ago, the Sister Sa team has introduced the cause and effect of the 25-year sentence of Sam Bankman-Fried (SBF), the actual controller of the FTX case (interested partners can refer to "Xiao Sa Team | Breaking News! The first offender of the FTX case was sentenced to 25 years in prison, the end of an era"). With the conviction and punishment of the "first offender", the case has temporarily come to an end. For most ordinary passers-by, investors, and creditors, SBF's heavy sentence is more of "relief" and "eating melons", and the most important thing for their own interests is how the FTX bankruptcy liquidation case will proceed, which determines whether our claims can be effectively repaid.
In addition, as the largest bankruptcy liquidation case in the world today and the largest global bankruptcy liquidation case of crypto assets in history, every move of the FTX case will attract the attention of investors from all over the world. At the same time, its handling of the bankruptcy case of a giant multinational crypto asset company will also become a benchmark case with important reference value to the world, affecting judicial practice for a long time in the future.
After the FTX case, the Sajie team has continuously received relevant rights protection consultations from my country's creditors. From 2022 to now, the case has also experienced multiple claims declarations. However, due to the large disputes in the actual implementation of the liquidation plan, FTX Due to reasons such as failure to complete liquidation of bankrupt assets within a short period of time, creditors have a long and distant road to repayment. Nowadays, FTX liquidation entities and claim portals have been established and opened, and the repayment of creditors is about to begin. Today, the Sajie team has specially produced the "FTX Claims Declaration Guide" for everyone, adding a new dimension to the road of rights protection for all partners. Grip.
FTX case background and liquidation team introduction
For those who are not familiar with the FTX case, Sister Sa’s team will first give a brief introduction to the FTX case.
Before its bankruptcy and collapse, FTX, founded in 2019, was a world-class cryptocurrency exchange that could compete with the famous Binance. It is headquartered in the Commonwealth of The Bahamas, the backyard of the United States, and its main business is concentrated. In the U.S. FTX is huge, with hundreds of large affiliated companies and millions of customers all over the world. After FTX completed Series C financing in 2022 (led by Sequoia, Temasek, SoftBank, Tiger, etc.), its valuation has reached an astonishing US$32 billion.
The collapse of FTX was rapid and irreversible, fully embodying the theorem of "a day in the currency world, a year in the world". Initially, Coindesk, a well-known media in the currency circle, published a report at the end of 2022, which revealed that up to 70% of the assets of Alameda Research controlled by SBF were actually FTT, a token with poor market liquidity issued by FTX itself. Subsequently, Binance publicly announced the liquidation of a large number of FTT tokens it held. This move triggered market panic in the current slump in the encryption industry. With everyone selling FTT, FTX was unsustainable and entered death. spiral.
After FTX collapsed and entered bankruptcy proceedings, its headquarters legal entity FTX Digital was registered in the Bahamas, but its main business was carried out in the United States through its subsidiary FTX Trading Ltd., but FTX maintained operations in both jurisdictions. Certain bankrupt assets. Accordingly, on November 14, 2022, the Supreme Court of the Bahamas appointed two principals from PwC’s Bahamas office and Hong Kong as provisional liquidators to commence the liquidation proceedings of FTX Digital in the Bahamas. Subsequently, the U.S. Court of Delaware placed FTX Trading Limited and its related debtor entities (collectively, the "Debtors") into bankruptcy proceedings in accordance with Chapter 11 of the U.S. Bankruptcy Code, and on February 15, 2023, the company was subject to judicial proceedings. The provisional liquidation of the Bahamas is recognized.
At the end of 2023, the Supreme Court of the Bahamas appointed the joint provisional liquidator JPL as the joint official liquidator of FTX Digital and its affiliated companies (The Joint Official Liquidators ("JOL")), using the legal entity "FTX Digital Markets Ltd" specifically for the liquidation of FTX. The assets are liquidated and creditors are compensated (the liquidation process shall be carried out in accordance with the provisions of the domestic law of the Bahamas on the liquidation of international business companies).
Currently, JOL has established a special FTX claim declaration website. Customer claims, non-customer claims, and transferee claims are all submitted to the website for declaration. The declaration needs to be completed before May 15, 2024.
FTX Debt Declaration Guide
1. Enter the FTX debt declaration and claims portal and register your own claim account
First, creditors need to go to the FTX Claims Filing and Claims Portal: https://digitalmarketsclaim.pwc.com/
Partners who enter for the first time need to click on the blue box in the upper right corner to register a claim account. You mainly need to fill in your name, email, country and region, contact information and other information. You need to pay attention to using a reliable email to register, because every subsequent login requires a verification code to be sent to the registered email. If there is a problem with the email, it may This will result in the inability to log in normally.
In addition, partners need to pay attention to correctly selecting the claimant type. The three options are "Individual customer", "Institutional customer" and "Non-customer creditor". If you are a user of the FTX exchange and register in your own name and use the FTX platform to trade crypto assets, select an individual client; if you use an FTX account registered with a legal entity, such as a company, select an institutional client; if you are not an FTX user The customer has not used the FTX platform, but has a creditor-debt relationship with FTX or its affiliates for other reasons (such as employees employed by FTX, suppliers that provide products to FTX, etc.) and chooses non-customer creditors.
The website is relatively lenient in registration. Even if it chooses institutional clients or non-client creditors, it does not require the registrant to provide relevant documents such as the identity certificate of the authorized representative during the registration process.
2. Registration of creditor and customer account details
In this section, you need to pay attention to what kind of debt your claim is. If you are an individual client or corporate client as mentioned earlier, then we can directly submit our account registration information on FTX on the application page of the website (taking a natural person as an example, you need to fill in your name, date of birth, telephone number, address, country or region of residence, occupation, nationality, ID number, etc.), and you can link your claim account with your FTX account. After the link, you can also check your account status.
After completing the account linking, the website will jump to the credit balance confirmation page. Partners need to pay attention to this part. You must carefully check and check whether the balance and assets displayed on this page are consistent with the assets in your FTX account. If the confirmation is consistent, you can click the blue button to confirm, and this part of the assets will become our declared claims and enter the claim process.
If you have any objections to the assets in your FTX-linked account, you need to submit materials about your claims to JOL through the Dispute Portfolio objection procedure. In this part of the procedure, the Sajie team recommends consulting professionals to prepare the required declaration materials for objection declaration, especially for non-client creditors, who need to submit the required claims basis and claims certificates for declaration. This part of the work is relatively professional and requires professionals familiar with the relevant bankruptcy laws of China, the United States, and the Bahamas to make judgments.
In addition, for the acquired FTX bankruptcy claims, a complete proof of acquisition is required for declaration. For example, if the friends of the Sajie team purchased another person's FTX bankruptcy claim on Xclaim, they need to submit the relevant claim transfer certificate to declare the claim. If there is a guarantee on the claim declared by the friends, the relevant guarantee certificate needs to be submitted as the claim declaration material to prevent the guarantee from becoming invalid due to failure to declare in time.
Finally, after completing the submission of the above materials, a normal KYC procedure (an identity verification procedure set up based on anti-money laundering compliance requirements) is carried out, and the friends' claims declaration is completed.
If you have already filed a bankruptcy claim on KROLL, do you need to file it again?
As mentioned before, the bankruptcy case of FTX Trading Ltd. in the United States has been accepted by the Delaware court, and the well-known bankruptcy management company KROLL is responsible for registering bankruptcy claims. Since the United States moves relatively quickly, many investors who suffered losses in the FTX case have already declared their claims on KROLL in advance. So, do those who have already declared their claims need to make a second declaration in the Bahamas?
First, we need to understand the legal consequences of declaring on two platforms: If you have already declared a claim on KROLL, declaring it again on the FTX bankruptcy claims portal designated by the Bahamas will automatically result in two legal consequences:
(1) The creditor’s declaration of claims and claims against FTX Trading Ltd., its affiliates, affiliated debtors, etc. based on the U.S. Bankruptcy Law are deemed to be withdrawn;
(2) Bankruptcy claims are transferred to the courts of The Bahamas, which will exercise jurisdiction over, verify, value, reconcile, adjudicate, resolve and pay off the creditors’ claims and claims in accordance with the relevant laws of The Bahamas.
Secondly, we need to understand that in the FTX bankruptcy case, the United States and the Bahamas have reached a preliminary consensus on the liquidation of the bankruptcy property: after the liquidation is completed, it will be distributed as a whole. Therefore, the Bahamas’s claim declaration based on the FTX Digital entity actually gives creditors a choice of jurisdiction and the right to use legal freedom, but it will not cause creditors who are liquidated in the Bahamas or the United States to face substantial unfairness in the process of receiving compensation.
This option will not result in an increase or decrease in the liquidation property. However, the application of such laws and the choice of judicial authorities will more affect whether the bankruptcy claims of FTX-related creditors can be recognized, the size of the recognition ratio, the raising and ruling of objections, etc., which also concerns the vital interests of creditors. Therefore, Sister Sa’s team recommends that partners consult a professional legal team before making a choice.
