The collapse of FTX Trading Ltd. was one of the most significant events in the cryptocurrency industry. This article covers everything you need to know about the ongoing FTX bankruptcy proceedings, key taxation information, and critical deadlines for creditors and customers involved in the case. Here, we’ll break down the background of the case, the steps taken in the legal process, and what to expect moving forward.
Case Background
FTX Trading Ltd., alongside 101 affiliated debtors, filed for Chapter 11 bankruptcy on November 11 and November 14, 2022. The filing was made in the United States Bankruptcy Court for the District of Delaware under the oversight of Judge John T. Dorsey. Since then, FTX has been entangled in complex legal proceedings, with multiple entities having their cases dismissed along the way.
Dismissals of Affiliated Entities
Several FTX-affiliated companies have had their bankruptcy cases dismissed, signifying either the closure or resolution of these entities’ involvement in the broader bankruptcy proceedings. Notable dismissals include:
- February 13, 2023: SNG Investments Yatirim Ve Danismanlik Anonim Sirketi and FTX Turkey Teknoloji Ve Ticaret Anonim Sirketi.
- August 18, 2023: FTX Exchange FZE.
- November 13, 2023: Liquid Financial USA, Inc., LiquidEX LLC, Zubr Exchanged Ltd., and DAAG Trading, DMCC.
- March 18, 2024: FTX Certificates GmbH, FTX Crypto Services Ltd., FTX Structured Products AG, FTX Trading GmbH, and FTX Switzerland GmbH.
- April 19, 2024: Multiple entities including Alameda Aus Pty Ltd, FTX Japan Services KK, and others.
The remaining cases are still pending and are being jointly administered under Case No. 22-11068, under Judge Dorsey’s oversight.
Taxation Information
For those who were customers, vendors, or employees of FTX, tax reporting remains an essential aspect of the bankruptcy process. The company has released key tax-related documents and guidelines to assist stakeholders in meeting their tax obligations.
1099 Documentation and FAQs
FTX has provided detailed guidance for tax preparation, including the following resources:
- U.S. Tax Reporting for Customers and Vendors: This document provides tax reporting information for customers who engaged in transactions with FTX and for vendors who provided services.
- U.S. Tax Reporting for Employees: Employees of FTX can access documentation outlining their tax obligations.
- FAQs on 1099 Intake and Document Process: This section answers common questions about the 1099 tax reporting process.
- U.S. Tax Consequences of Receiving Distributions (July 22, 2024): This FAQ document explains the tax implications of receiving distributions as part of the bankruptcy process.
Consultation with Tax Advisors
FTX advises all stakeholders, particularly those who have not kept sufficient records, to consult with their tax advisors. Given the complexity of tax reporting in the context of a bankruptcy case, professional guidance can help ensure that stakeholders meet their obligations correctly.
Important Information and Key Dates
Plan of Reorganization and Disclosure Statement
On May 7, 2024, the debtors filed their Chapter 11 Plan of Reorganization and the accompanying Disclosure Statement. The Bankruptcy Court approved the Disclosure Statement on June 26, 2024. A hearing to consider the confirmation of the reorganization plan is scheduled for October 7, 2024, at 10:00 a.m. (Eastern Time). This hearing is crucial, as it will determine the future of FTX and its affiliated debtors as they attempt to emerge from bankruptcy.
Deadlines for Filing Claims
For customers and creditors, filing claims is an essential step in the bankruptcy process. The Bankruptcy Court has established several deadlines, which must be strictly followed:
- General Non-Customer Bar Date: June 30, 2023.
- Proof of Interest Bar Date: June 30, 2023.
- Governmental Bar Date: September 29, 2023.
- Customer Bar Date: September 29, 2023.
- Amended Schedules Bar Date: October 18, 2023.
- Amended Bar Date for Certain Customers: February 26, 2024.
These deadlines are critical for anyone seeking to recover assets or make claims against FTX as part of the bankruptcy proceedings. Missing these dates could significantly impact the ability to participate in any distributions from the bankruptcy estate.
How to Submit a Claim
Stakeholders can download a proof of claim form and find more information about the process by visiting the official FTX restructuring website. Specific orders regarding the non-customer and governmental bar dates, as well as the customer bar date, are also available for download.
Legal Proceedings and Key Hearings
Meeting of Creditors
The Meeting of Creditors, also known as the Section 341 meeting, took place on December 20, 2022, via teleconference. This meeting allowed creditors to ask questions about the bankruptcy case and the debtors’ financial affairs.
First Day Hearing
The First Day Hearing was held on November 22, 2022, when the Bankruptcy Court considered various motions filed by FTX to help stabilize the company during the initial phase of bankruptcy. A follow-up hearing on certain motions occurred on January 11, 2023.
First-Day Motions and Orders
The initial motions and orders set the groundwork for how the FTX bankruptcy would proceed, addressing issues such as operational continuity and protection of debtor assets. All related documents can be accessed through the FTX restructuring website.
Customer Alerts: Scams, Frauds, and Data Security
During the bankruptcy proceedings, FTX has issued several alerts regarding scams and fraudulent activities targeting its customers. Scammers have been attempting to exploit the situation by pretending to represent FTX or its debtors, asking for money, fees, or passwords.
Important Warning
FTX has made it clear that neither the company nor its agents will ever request money, payments, or personal information from customers as part of the bankruptcy process. If you receive suspicious communications, always verify their authenticity by contacting FTX directly at inquiry@ftx.com before sharing any information.
Data Security Incident
In addition to scams, FTX has also reported a data security incident that has impacted information related to the bankruptcy case. A dedicated webpage has been set up to provide further information about this breach, which stakeholders should review for updates on how it may affect them.
Committee Information Sharing Procedures
On February 7, 2023, the United States Bankruptcy Court for the District of Delaware approved an order establishing protocols for sharing information with creditors. The Official Committee of Unsecured Creditors, appointed in the FTX bankruptcy case, has been tasked with making non-confidential and non-privileged information available to creditors through a dedicated website. This resource allows creditors to stay informed about the case and access essential documents.
Accessing Information
Creditors can visit the Creditors Committee Website for updates and information related to the bankruptcy. This platform serves as a centralized hub for all non-confidential communications between the debtors and their unsecured creditors.
For those involved in the FTX bankruptcy case, staying informed about the ongoing proceedings is crucial. With multiple dismissals, upcoming deadlines, and ongoing fraud attempts, it is essential to monitor developments closely.
