FTX, the cryptocurrency exchange that experienced a high-profile collapse, is now eyeing legal proceedings as a potential revenue source. Amidst its ongoing organizational restructuring following bankruptcy, FTX is involved in multiple lawsuits and legal claims from which it aims to recover billions of dollars. The Wall Street Journal reports that the troubled crypto exchange is currently entangled in over a dozen legal battles.
The exchange, which was once a prominent name in the industry, is grappling with an $8 billion fraud case that has resulted in the loss of most of its assets. Nevertheless, FTX’s lawyers are actively working on plans to recover all spent funds by addressing the allegations made against them in the lawsuit. If FTX emerges victorious in the ongoing legal fight, it could mean a multi-billion-dollar recovery for the company.
The WSJ has indicated that in addition to the current legal processes, the crypto exchange is expected to face even more lawsuits in 2024. Analysts, including Alan R. Rosenberg of Markowitz Ringel Trusty & Hartog, suggest that FTX’s legal battles may be protracted, potentially outlasting other crypto bankruptcies such as those of Celsius and BlockFi.
The complexity of FTX’s case is partly due to the numerous claims and avoidance actions it faces, aiming to recover payments made in the weeks and months leading up to its bankruptcy. FTX has already settled complaints with significant creditors, including Genesis, an important creditor of Alameda Research, a trading firm affiliated with FTX. As part of the settlement, Genesis will pay FTX $175 million.
Sam Bankman-Fried, the founder of FTX, has been found guilty of fraud charges after a month-long ordeal. According to Reuters, the trial took place nearly a year after the rapid collapse of the crypto exchange, which led to its bankruptcy filing and put financial markets under pressure, nearly wiping out SBF’s personal fortune of approximately $26 billion.
Should the company’s ongoing lawsuits conclude in FTX’s favor, the implications may extend beyond the recovery of billions of dollars. It could also signify a potential recovery for FTX, which might attract investors and signify a turning point for the once-dominant exchange.