A few quick observations written while not yet caffeinated:
I think this kind of thing happened in the Mt. Gox bankruptcy due to appreciation in crypto values after the filing.
Because there is a time limit for filing clawback claims, the estate needs to be file them even if it hopes it could be in a position to withdraw them later. Off the top of my head, that time limit is often two years after the filing of the bankruptcy case.
I believe that EA-related fraudulent conveyance (“clawback”) claims are, by dollar amount, only a portion of the clawback or preference claims filed by the estate. At least early on in the case, these claims were expected to be in the billions. Some relate to SBF shadiness, like asset transfers to insiders, but I believe some related to arms-length commercial transactions that fall under the clawback/preference rules. So the estate can repay everyone after cashing in on clawback/preference claims does not imply that it could if those claims were refunded.
That the creditors may eventually be paid in full does not necessarily imply they will be made whole.
First, it’s not clear how the time value of money is factoring into FTX’s statement. And final resolution is probably many years away.
More significantly, at least as of December, the reorg plan was valuing customer crypto based on its value on the date of bankruptcy filing. So the customers would still be cheated out of their gains. Although I didn’t check, I am guessing the value of FTT and maybe other crypto went down in the days before filing as a result of the unfolding FTX fiasco, so those FTX-caused losses would still be locked in for the customers under the plan.
Off the top of my head, that time limit is often two years after the filing of the bankruptcy case.
Do you know where I can find a legal reference with the exact time limit?
If the FTX debtors are paid back without taking back my grant, I’d like to donate it somewhere, but I need to know I’m protected from a clawback in that scenario.
I want to be really careful not to give legal advice here, both for the usual reasons and because this is a complex multijurisdictional bankruptcy affair.
I think I had the explainer written by Open Phil’s outside counsel shortly after implosion in mind, but it doesn’t contain a citation.
This is definitely one of those cases where you should obtain legal advice (perhaps jointly with people in a similar situation) before giving the monies away.
I suspect it will be a long time before we know “the FTX debtors are paid back,” especially since so much of the asset base is highly volatile. Thankfully, interest rates are good at the moment, so you can ~preserve the power of the donation by putting the funds in short-term Treasuries (or equivalent) while you wait.
A few quick observations written while not yet caffeinated:
I think this kind of thing happened in the Mt. Gox bankruptcy due to appreciation in crypto values after the filing.
Because there is a time limit for filing clawback claims, the estate needs to be file them even if it hopes it could be in a position to withdraw them later. Off the top of my head, that time limit is often two years after the filing of the bankruptcy case.
I believe that EA-related fraudulent conveyance (“clawback”) claims are, by dollar amount, only a portion of the clawback or preference claims filed by the estate. At least early on in the case, these claims were expected to be in the billions. Some relate to SBF shadiness, like asset transfers to insiders, but I believe some related to arms-length commercial transactions that fall under the clawback/preference rules. So the estate can repay everyone after cashing in on clawback/preference claims does not imply that it could if those claims were refunded.
That the creditors may eventually be paid in full does not necessarily imply they will be made whole.
First, it’s not clear how the time value of money is factoring into FTX’s statement. And final resolution is probably many years away.
More significantly, at least as of December, the reorg plan was valuing customer crypto based on its value on the date of bankruptcy filing. So the customers would still be cheated out of their gains. Although I didn’t check, I am guessing the value of FTT and maybe other crypto went down in the days before filing as a result of the unfolding FTX fiasco, so those FTX-caused losses would still be locked in for the customers under the plan.
Do you know where I can find a legal reference with the exact time limit?
If the FTX debtors are paid back without taking back my grant, I’d like to donate it somewhere, but I need to know I’m protected from a clawback in that scenario.
I want to be really careful not to give legal advice here, both for the usual reasons and because this is a complex multijurisdictional bankruptcy affair.
I think I had the explainer written by Open Phil’s outside counsel shortly after implosion in mind, but it doesn’t contain a citation.
This is definitely one of those cases where you should obtain legal advice (perhaps jointly with people in a similar situation) before giving the monies away.
I suspect it will be a long time before we know “the FTX debtors are paid back,” especially since so much of the asset base is highly volatile. Thankfully, interest rates are good at the moment, so you can ~preserve the power of the donation by putting the funds in short-term Treasuries (or equivalent) while you wait.