Pasternak Featured in Law360 Article on FTX Bankruptcy Returns
October 23, 2024 – Jonathan Pasternak, Partner in the Bankruptcy Law practice was recently featured in a Law360 article titled: “FTX Creditor Returns Are Impressive, But Not For Everyone”.
In a surprising outcome for creditors, former customers of the collapsed cryptocurrency exchange FTX will recover 118% to 142% of their claims under a Chapter 11 bankruptcy plan confirmed on October 7. Though impressive for a bankruptcy proceeding, the recovery fails to satisfy some investors. Jonathan, noted that many creditors still feel “bitter,” especially since the situation stems from fraud by FTX’s founder, Sam Bankman-Fried.
The bankruptcy plan, approved in Delaware, locks in creditors’ recoveries based on cryptocurrency values from November 2022, when FTX initially filed. This decision, coupled with subsequent rises in crypto prices, leaves some investors frustrated that they could have potentially recouped more had their assets remained untouched.
“Those who invested in crypto in the first place knew it was a major risk,” Pasternak commented, adding, “they didn’t expect the kind of risk that happened here where your crypto was stolen from under you.” He placed the FTX case among infamous frauds like Enron and Bernie Madoff, in which recovery teams worked hard to return value to creditors under challenging circumstances.
While the Chapter 11 plan delivers a swift return to creditors, this outcome serves as a reminder of the potential volatility and risks in the crypto market, leaving some investors wary for the future.