On Friday, United States Federal prosecutors presented documents in court asking for a permit to utilize a website to facilitate communication with investors who lost funds in FTX’s downfall. Judge Lewis Kaplan, presiding over the case, granted the request on the same day.
FTX owes funds to over 90,000 creditors, according to the collapsed exchange’s bankruptcy filing a few weeks ago. In addition, if users of FTX.US and FTX are included, then the exchange owes money to over 1 million individuals.
The prosecutors argued that it would be impossible to reach out to all victims individually. Usually, in criminal cases, victims have the right to be notified ahead of sentencing proceedings or plea to have sufficient time to decide if they wish to testify in court.
FTX CEO Believes Only a Small Group of US FTX Users Will Appear in Court
The current FTX CEO informed the United States Financial Service Committee last month that only a small number of American users were on FTX.com. He added that they were about 2.6 million American accounts; however, that did not directly translate to the number of users since people had multiple accounts.
Also read:Before FTX.com collapsed, users from the United States only accounted for 2% of the traffic going to the exchange. Based on this data, John Ray, the FTX CEO, claimed that it is unlikely that many American victims will appear in court.
FTX Users and Creditors Grow Impatient
As the bankruptcy case proceeds, there is growing impatience among FTX users and creditors. A few ago, a Creditors Committee of FTX Trading opposed FTX’s request for extending the deadline to submit a detailed account of its liabilities and assets.
Initially, FTX requested a deadline extension on November 17th, then pushed the due date to January 22nd. Furthermore, in mid-December, the exchange requested another deadline proposing April 15th as the due date. However, the committee thinks that additional time will make no difference.
While objecting to FTX’s request, Daniel O’Brien, the attorney representing the Creditors Committee, argued that the debtors might never reconcile their pre-petition records and books or file accurate statements in this bankruptcy case. For those reasons, there was no need for a deadline extension.
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