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FTX bankruptcy proceedings reveal 8% of creditors are based in the UK

The sudden collapse of FTX in November, valued at $32 billion earlier this year, has left investors and traders with funds locked in the FTX exchange or lost in transfers between FTX and Alameda Research.

Bankruptcy hearings are on foot in Delaware, and it has been revealed that around 8% of FTX's creditors are British. It is far from clear at the moment how much money will be left to recover, but there are options available for investors. It is noted that FTX Trading Ltd's terms of service state that "the terms and any dispute shall be governed by, and construed in accordance with, English law".

The FCA has published a notice reminding FTX customers that FTX was not authorised, regulated or registered by the FCA (and so cannot step in to help). The FCA's assistance will therefore be limited to provided financial guidance. FTX's collapse has placed a spotlight on the need for cryptoassets to be subject to increased regulation, and indeed a new financial services and markets bill (currently being approved by parliament) is expected to bring the marketing of cryptoassets under regulation, which should in the future give the FCA increased powers to protect consumers.

Whilst it is too soon to tell of any outcome for UK customers who have lost money with FTX, any claims will be determined on a case-by-case basis, and the first step is to engage legal assistance.

This summary is intended to provide a first point of reference for current developments in aspects of the law. It should not be relied on as a substitute for professional advice. 

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Lawyers for the company told the court that 8% of the FTX group’s customers were based in the UK, representing about 80,000 unsecured creditors. Most of those customers are believed to be corporate clients and investment professionals, using the lightly regulated FTX International exchange to make risky leveraged bets on cryptocurrency values.

Tags

disputes, digital assets, cryptoassets, cryptocurrency
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