Tech News

Lost your crypto amid Chapter 11 bankruptcy filings? You’re probably not getting it back • TechCrunch

If you lost access to your money when the crypto firm holding your assets filed for bankruptcy, then you’re probably out of luck.

As Chapter 11 bankruptcy proceedings move forward for several big-name crypto companies, those who lost funds are surely hoping to get all — or at least some — of their money back. Lawyers and experts shared their thoughts with TechCrunch on what these cases could mean for creditors and what may happen to those who saw their money disappear overnight.

Earlier this month, Genesis Global Trading, a subsidiary of the crypto conglomerate Digital Currency Group (DCG), filed for Chapter 11 bankruptcy. Genesis is the latest crypto-focused entity to join the Chapter 11 bankruptcy club alongside FTX, BlockFi, Three Arrows Capital, Celsius Network and Voyager — all of which filed mid- to late 2022.

For the most recent Chapter 11 filers, Genesis owes more than $3.6 billion to its top 50 unsecured creditors, while FTX owes its top 50 unsecured creditors over $3 billion. The bankruptcy filings have redacted the majority — if not all — of the identifying information for the parties involved.

One of FTX’s biggest unsecured creditors is owed more than $226 million, and the company could have over 1 million creditors, according to earlier bankruptcy filings.

“If I were an FTX creditor, I’d hope for the best but expect to face reality. If you get more than 2 cents on the dollar, I’d consider myself lucky.” Terrence Yang, managing director at Swan Bitcoin

So it’s safe to say that a lot of people are heavily invested in the outcome of these bankruptcy cases, as their funds, ranging from small amounts to millions of dollars, are involved. But it’s not certain if they’ll ever see the deposited funds again.

What will happen to creditors “really depends on the mix of assets and liabilities of the company as well as the prospects of the same company exiting bankruptcy,” Jason Allegrante, chief legal and compliance officer at Fireblocks, said to TechCrunch. “If the business is otherwise healthy but has experienced a liquidity shock, for example, there is still a chance that the business can recover and generate revenue,” meaning creditors may be reunited with some of their funds.

Secured creditors will have priority “if and when assets are distributed,” Joel Telpner, chief legal officer at Input Output Global and special counsel at Sullivan & Worcester, said to TechCrunch. “All other creditors stand in line after the secured creditors are first paid. If it’s a company with shareholders, then if there’s anything left, it’ll go to shareholders.”


Hi there! I am the Founder of Cyber World Technologies. My skills include Android, Firebase, Python, PHP, and a lot more. If you have a project that you'd like me to work on, please let me know:

Related Articles

Back to top button