Kleinberg Kaplan Partners Quoted Extensively in Media in Wake of FTX Collapse
In The American Lawyer article “For Crypto Attorneys, FTX Bankruptcy Is a ‘Black Swan Event,’” Jared Gianatasio considers how the downfall of FTX may lead to increased regulatory scrutiny in the crypto space. In a second AmLaw article related to law firms accepting crypto as payments in the wake of the FTX scandal, Jared shared, “There is a crisis of confidence right now, meaning that firms not accepting cryptocurrencies before the FTX situation wouldn’t be considering it now.”
Jared, Matt and Dov were interviewed by Blockworks for their thoughts on what entities can expect as FTX’s bankruptcy plays out. The article discusses how the “‘bare bones’ initial bankruptcy filings submitted by FTX could portend a poor outcome for customers with frozen funds,” and compares FTX to the bankruptcies of Voyager Digital and Celsius and ponders what comes next in the process.
A Fortune.com article covers how some FTX users may have found a way to withdraw some of their funds by taking advantage of a loophole in FTX’s compliance with Bahamian regulators to allow the withdrawal of Bahamian funds. Matt Gold pointed out that if users took assets from a bankruptcy estate under false pretenses, this “could be a federal crime.” He added that penalties may depend upon whether or not these traders were based in the United States.
In Business Insider, Matt Gold spoke about the “uncharacteristically blunt” nature of the FTX bankruptcy filing, saying, “These [filings] tend to be more caged, lawyerly discussions of things,” which was not the case with the FTX filing.
The Wall Street Journal shared Dov Kleiner’s views on the topic of whether FTX assets and cryptocurrency should be controlled by Bahamian regulators or FTX itself, and how the answer to that question will affect the process by which customers try to recover their assets. “Unless you consolidate all the FTX entities or there’s a coordinated proceeding, it’s hard to collect assets and allocate them to the right creditors,” Dov said.
On the question of asset control and recovery, Matt Gold spoke to Law360. Regarding the differences between Bahamian and American insolvency laws, Matt offered, “In general, U.S. bankruptcy law provides more opportunities for a broad spectrum of creditors to participate in the process and provides more robust laws concerning the clawback of assets from those that might have received payments…It provides generally more flexibility in terms of how a Chapter 11 reorganization can be conducted compared to what I understand about the Bahamian liquidation procedures.”
Matt and Dov also provided thoughts to Axios on the “venue battle” occurring over the FTX bankruptcy.