FTX plans to generate billions of dollars just from lawsuits and legal claims amid bankruptcy and organizational restructuring. The embattled cryptocurrency exchange is currently in the middle of more than a dozen lawsuits, according to The Wall Street Journal.
FTX to recover billions from current lawsuits
Bankrupt cryptocurrency exchange FTX is right now in an $8 billion fraud lawsuit, which led to the exchange losing most of its assets. However, it plans to recover all the money spent by raising claims in the lawsuit. If the current legal battles go through and are in favor of the debt-laden exchange operator, it could result in billions of dollars in retrieval for FTX.
More to come in 2024
Apart from the current and ongoing legal claims, the crypto exchange also plans to pursue more lawsuits in 2024, WSJ noted in its report.
Many analysts, including Alan R. Rosenberg, a partner at Markowitz Ringel Trusty & Hartog, estimate that the saga of legal battles for FTX will go on longer, possibly even longer than some other crypto bankruptcies like Celsius and BlockFi.
This is because FTX is going through multiple claims, or avoidance actions, trying to recover money it paid out in the weeks and months before becoming insolvent.
FTX has already settled mutual adversary complaints with Genesis, which had been a major creditor of FTX-affiliated trading firm Alameda Research, and international creditors. As part of the lawsuit, Genesis agreed pay a massive $175 million to FTX.
The $8 billion debacle and the market’s predicament
After a month-long battle, FTX’s CEO was convicted of the fraudulent claims that were raised against him.
The trial came just one year after the embattled crypto exchange filed for bankruptcy in a rapid corporate meltdown, putting financial markets under pressure and erasing around $26 billion in personal fortune, according to Reuters.
If the current and future lawsuits were to go in favor of the crypto trading exchange, not only would it mean a recovery of billions for it but also a possible restoration and successful restructuring of operations for FTX, but also better investor sentiment, and an increase in risk appetite among users.
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