The Collapse of FTXNovember 16, 2022 – Media Mention
Brian Davidoff, chair of the Bankruptcy, Reorganization & Capital Recovery Group, spoke on WGN Radio's Legal Face-Off regarding crypto exchange FTX filing for bankruptcy.
"First, we have to figure out whether the customer deposits were inappropriately used. If they were, there is potentially a series of legal liabilities."
"What we have seen the SEC do in prior proceedings is that they have asserted in prior litigation that [...] if a majority of the computer nodes are in the United States, then the United States has jurisdiction over those entities."
"One of the big challenges, which certainly exists in the FTX case, is who owns those deposits. That is a key issue. If the deposits are owned by the customers, they should be able to get whatever is available and can be recovered. They should be able to get in priority ahead of creditors. If the money is not owned by the customers, then those funds are available to unsecured creditors How do you determine that? You need to look at the customer agreement. [...] There is some language in the FTX customer use agreement that seems to indicate that the funds that are in the customer wallets hosted by the FTX exchange are customer property. But, there is also some language in that agreement, which seems to run against that."