The FTX creditor liquidation has entered a new phase, and the creditor declaration guidelines are here.

Recently, Sam Bankman-Fried, the actual controller of the FTX case, was sentenced to 25 years in prison, marking a new phase in this sensational cryptocurrency exchange collapse case. For many creditors, the most pressing concern is how to file claims and whether they can receive effective repayment. As the largest bankruptcy liquidation case in the world today and the first global cryptocurrency asset liquidation case, every step of the FTX case is closely watched, and its handling will provide important references for similar cases in the future.

Background of the FTX Case and Liquidation Overview

FTX was established in 2019 and was a top cryptocurrency exchange that was on par with Binance. Headquartered in the Bahamas, its main business was focused in the United States, with hundreds of affiliated companies and millions of users. After completing its Series C funding round in 2022, FTX was valued at as much as $32 billion.

However, the collapse of FTX came suddenly and swiftly. At the end of 2022, media reports disclosed significant issues with the asset composition of FTX's affiliated company Alameda Research, triggering market panic. Under the dual pressure of concentrated user withdrawals and the plummet of the FTT token, FTX quickly fell into a liquidity crisis and ultimately filed for bankruptcy protection.

In light of FTX's complex structure, its bankruptcy liquidation process is being conducted simultaneously in both the Bahamas and the United States. In November 2022, the Supreme Court of the Bahamas appointed a provisional liquidator to initiate the liquidation process for FTX Digital. In February 2023, the Delaware court in the United States recognized the provisional liquidation in the Bahamas. At the end of 2023, the Bahamian court appointed a formal liquidator (JOL) to oversee the liquidation of FTX Digital and its affiliated companies.

Currently, JOL has established a dedicated FTX creditor declaration website to uniformly accept the declarations of client claims, non-client claims, and assigned claims. The declaration deadline is May 15, 2024.

FTX Claim Submission Guide

1. Register a claim account

Creditors need to visit the FTX creditor claim and compensation portal to register a personal claim account. During registration, they must fill in information such as name, email, country/region, and contact details. It is recommended to use a reliable email, as subsequent logins will require an email verification code.

You must correctly select the type of claimant when registering:

• Individual customers: Users who register and use the FTX platform in their personal name.
• Institutional clients: Users who register FTX accounts as legal entities.
• Non-customer creditors: entities with other creditor-debtor relationships with FTX or its affiliates

2. Register creditor information

For users of the FTX platform, you can directly submit your FTX account registration information to link the claim account with your FTX account. After linking, you need to verify whether the displayed account balance matches the actual balance. If there are no objections, you can confirm, and that portion of the assets will enter the claims process.

If there are any disputes regarding account assets, further materials must be provided to JOL through the objection process. Non-client creditors are required to submit the basis and proof of their claims. For transferred FTX bankruptcy claims, complete transfer evidence must be submitted. If the claims are secured, relevant proof must also be submitted.

The KYC identity verification process is finally completed, and the declaration of claims is now finished.

3. Repeated Declaration Issue

For creditors who have already declared their claims on the KROLL platform, if they declare again on the Bahamas platform, it will be regarded as:

1. Withdraw the claims and demands for debts filed against FTX Trading Ltd. and other companies under U.S. bankruptcy law.
2. Agree to transfer bankruptcy claims to the jurisdiction of the Bahamian court.

It should be noted that the United States and the Bahamas have reached a preliminary consensus on the liquidation of bankruptcy assets, which will be distributed as a whole after liquidation. Therefore, creditors can choose the jurisdiction and applicable law, but this will not affect the fairness of the final compensation.

The choice of different jurisdictions may affect specific issues such as the recognition of claims, recognition ratios, and the handling of objections. It is advisable for creditors to consult a professional lawyer before making a choice.