November 2022

BlockFi lawyer tells court priority is to ‘maximize client recoveries’

In this photo illustration, the BlockFi logo seen displayed on a smartphone.

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

BlockFi plans to reopen withdrawals as part of an effort to “maximize client recoveries,” the crypto lender’s lawyers said at a court hearing Tuesday, a day after the firm filed for Chapter 11 bankruptcy protection.

BlockFi’s lawyers at that hearing expressed optimism that the firm is in good position to restructure and salvage the business through the bankruptcy process.

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“We want to make sure we get people back as much of their value as quick as we can,” said Josh Sussberg, a partner at BlockFi’s legal firm Kirkland & Ellis.

BlockFi’s collapse was precipitated by exposure to Three Arrows Capital — which filed for bankruptcy protection in July — and to Alameda Research, the FTX trading arm that borrowed hundreds of millions of dollars from BlockFi. FTX had arranged a rescue plan for BlockFi, but that fell apart when FTX faced its own liquidity crisis earlier this month and rapidly sank into bankruptcy.

BlockFi loaned $671 million

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November 30, 2022 by ATTORNEY

Lawyers Detail the ‘Abrupt and Difficult’ Collapse of FTX in First Bankruptcy Hearing

“You have witnessed probably one of the most abrupt and difficult collapses in the history of corporate America,” an attorney for FTX said during the company’s first bankruptcy hearing in Delaware on Tuesday.

James Bromley of Sullivan and Cromwell, representing FTX, detailed the company’s rise and collapse in a brief presentation during the hearing, explaining how the company fell apart within the course of two weeks after bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/” data-ylk=”slk:a CoinDesk report” class=”link “a CoinDesk report showed that Alameda Research, a subsidiary of the overall FTX group, held an unexpectedly large amount of FTT tokens, issued by FTX itself.

There are over 100 different debtors tied to the FTX group that filed for bankruptcy, another attorney said.

Bromley called the case an “unprecedented matter,” tacitly acknowledging the chaos of FTX’s bankruptcy, which saw a hack the night it filed for bankruptcy and several days before typical first-day filings were available.

The new team at FTX, including new CEO John Ray III, has “assembled a team of investigators,” which includes former enforcement officials with the Securities and Exchange Commission, Commodity Futures Trading Commission and former prosecutors, Bromley said. FTX has also retained crypto analytics firm Chainalysis to help it investigate

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November 26, 2022 by ATTORNEY

FTX Is Allowed to Hide the Identity of Its 50 Biggest Creditors

(Bloomberg) — FTX creditors, including rich investors who don’t want their names made public, can remain anonymous and still participate in the company’s bankruptcy case for now, a judge ruled at the company’s first court hearing Tuesday. 

US Bankruptcy Judge John Dorsey agreed to let the fallen crypto exchange redact the names of the 50 biggest unsecured creditors owed a total of $3.1 billion. The US Bankruptcy Code normally requires the names be filed in documents available to the public. Representatives for FTX argued those creditors are also customers and disclosure would allow rivals to steal their business. 

The sudden fall of Sam Bankman-Fried’s crypto empire into bankruptcy Nov. 11 was so fast, and so disorganized that many standard procedures, including Tuesday’s hearing, have been subject to delays. The hearing began with FTX attorney James Bromley saying a “substantial amount” of the group’s assets “have either been stolen or are missing.” 

At least two groups of crypto creditors sent lawyers to the hearing to support the company’s request to keep their identities secret. One included members that are among FTX’s largest unsecured creditors — likely setting the stage for future fights for assets among various groups.

Dorsey agreed to

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November 24, 2022 by ATTORNEY

FTX lawyer says in first bankruptcy hearing this is different ‘animal’

Lawyers for collapsed crypto exchange FTX said in the company’s first bankruptcy hearing on Tuesday that regulators from the Bahamas, where FTX was headquartered, have agreed to consolidate proceedings in Delaware.

FTX’s lawyers, who were brought in by new leadership to handle restructuring, filed an emergency motion last week to secure the move to the U.S. The hearing on Tuesday was the initial step in the resolution of the largest cryptocurrency bankruptcy on record.

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“What we are dealing with is a different sort of animal,” said FTX counsel James Bromley. “Unfortunately, the FTX debtors were not particularly well run, and that is an understatement.”

Regarding FTX’s founder, this was an organization that was “effectively run as a personal fiefdom of Sam Bankman-Fried,” an FTX attorney told the court.

FTX lawyers confirmed earlier reports that the Southern District of New York’s Cyber Crimes unit has begun an investigation into the matter. FTX lawyers have also made reference to cyberattacks, suggesting there were multiple attacks beyond the $477 million hack that occurred shortly after the company entered bankruptcy on Nov. 11. In that attack, hackers

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November 23, 2022 by ATTORNEY

As more senior executives quit, Musk warns of Twitter bankruptcy

In a latest update, Twitter Inc’s new owner Elon Musk on Thursday cautioned that there is a possibility of the social media platform going bankrupt, closing a chaotic day that included a warning from a U.S. privacy regulator and the resignation of the company’s trust and safety head.

Elon Musk at Twitter Headquarters

Elon Musk at Twitter Headquarters

Bloomberg news reported that the billionaire-investor on his first mass call with employees said that he could not rule out the chance of bankruptcy, two weeks after taking over the company in a $44 billion deal that, according to credit experts, has left Twitter’s finances in an uncertain position.

In his first company-wide email, earlier in the day, Musk said that Twitter would not be able to “survive the upcoming economic downturn” if it did not succeed in boosting subscription revenue to compensate for the falling advertising income. This was informed by three people who have seen the message to Reuters.

Yoel Roth

Two people familiar with the matter told Reuters that Yoel Roth, who has headed Twitter’s response to counter hate speech, misinformation and spam on the service, resigned on Thursday.

In his Twitter bio on Thursday, Roth described himself as “Former Head of Trust &

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November 18, 2022 by ATTORNEY
November 2022
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