If you lost access to your money when the crypto firm holding your assets filed for bankruptcy, it’s possible that you won’t be able to get it back. Assets held in cryptocurrency are often not FDIC-insured, so getting your money back would likely require finding a new investor or wallet service who will help you retrieve your funds.
For many crypto holders, Chapter 11 bankruptcy proceedings represent a potential silver lining in an otherwise bleak situation. While it is still unclear exactly what will happen to these companies and their creditors, experts say that given the current regulatory landscape, there is a good chance that at least some money will be returned to those who lost it.
The tumultuous year for crypto stocks has not been kind to Genesis Global Trading. The company filed for Chapter 11 bankruptcy earlier this month, bringing the total number of crypto-focused companies filing for bankruptcy in 2022 up to six. This trend of failed businesses highlights a few underlying issues with the current cryptocurrency market. while these start-ups may have appeared innovative and exciting when they were founded, the reality is that many are struggling to make money or hang on to their customers. Furthermore, regulatory uncertainty continues to dog the space, making it difficult for some companies to secure funding or gain traction in a competitive environment.
Some possible creditors that Genesis and FTX may have to pay debts to include banks, hedge funds, and other investment companies. Other creditors who may be impacted could be individual investors who have purchased shares of Genesis or FTX during their recent run-up in value.
The FTX debt crisis is a major concern for the company and its creditors. FTX has over 1 million creditors, and owes more than $226 million to unsecured creditors. This could have serious financial repercussions for the company, and could lead to its bankruptcy.
“If I were an FTX creditor, I’d hope for the best but expect to face reality. If I get more than 2 cents on the dollar, I’d consider myself lucky.” Terrence Yang, managing director, Swan Bitcoin
FTX creditors have been waiting three long years for a payday. Now, there’s a new deadline looming – February 28, 2018 – and many expect little to happen. However, some FTX creditors are still hopeful that its administrators will come through with something better than two cents on the dollar. Terrence Yang believes that this is still very possible and is advising those creditors to prepare for the worst-case scenario by stockpiling goods and holding onto their bitcoin investments. Even if they only receive a fraction of their initial investment back, creditors who were proactive in saving their bitcoins during the crisis will be much better off overall than those who refused to believe in the digital currency’s potential and left everything on the line.
It’s not certain if the depositors will ever see their funds again, as many of the bankruptcies are still in court, and it could take many months or even years for a resolution to be reached. In the meantime, depositors may have to file claims with their banks or creditor companies in order to receipts any money that was deposited into their account during the bankruptcy proceedings.
Creditors of a company that goes bankrupt often experience significant losses. This is because companies often have large liabilities, such as loans and bonds, and few assets to pay them with. Many creditors are usually only able to receive a fraction of their original investment back.
When a company goes bankrupt, the priority for creditors is usually determined by the amount of debt owed. Secured creditors, such as banks and other lenders who put up security in order to receive money from a loan, are usually given preference over unsecured creditors. If there’s anything left after satisfying the secured debts, it will then be distributed to shareholders.
