Can you be affected by Clawback laws in this whole FTX disaster?

o_e_l_e_o

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Quote from: Zaguru12 on November 16, 2022, 12:47:27 PM

I'm a bit confuse here, what happens to countries where cryptocurrencies are banned. And a scenerio like this happens. Wouldn't the investor be charged after the fiasco of retuning the funds.

Need clearer explanation please

No idea. I was taking simply about Chapter 11 bankruptcy proceedings in the US. It is unlikely that clawbacks for regular users are going to cross international borders, because as I said above, the time/effort/money required to do so will likely far outweigh anything that can be recovered (unless you happened to recently withdraw tens of millions of dollars worth of crypto from FTX).

However, bear in mind that as I said above, as part of a Chapter 11 bankruptcy we are likely to see a full list of names and addresses of all of FTX's users, which will include any who have signed up from countries where bitcoin is banned.

Quote from: flame0562 on November 17, 2022, 03:36:31 AM

But if you want to spin big money, it is a liability to use these entities. Yikes!

It is always a liability to use these entities. Anything you deposit on their platform, from 0.0001 BTC to 1000 BTC, immediately ceases to be owned by you and is used in a variety of shady and often illegal trading/lending/investment vehicles to make profit for the exchange, frequently with disastrous results for the user.

flame0562

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Quote from: o_e_l_e_o on November 16, 2022, 05:15:01 AM

Quote from: flame0562 on November 16, 2022, 03:28:22 AM

So now my obvious questions/doubts are:
"Wait a second, so I could start seeing in the future letters from lawfirms or such saying I gotta give back the money I withdrew so that other people that lost money get some back?"

Potentially, yes.

As part of a Chapter 11 bankruptcy, funds which were withdrawn in the 90 days prior to the bankruptcy filing can be clawed back and added to the pot of assets to be distributed. There are suggestions that Celsius are planning to do this during their bankruptcy proceedings, but the process will take many months, if not years, to be finalized.

If you withdrew coins within 90 days of the bankruptcy, then yes, you could see letters in the future demanding you return those funds. This will also be largely dependent on the size your withdrawal, as for small withdrawals it probably isn't worth the time or money to pursue.

Quote from: flame0562 on November 16, 2022, 03:28:22 AM

But if this were true, then I would ask myself: what is the point of ever touching exchanges and even having those withdraw buttons there if any exchange that goes belly up could get enforced by the US to have funds be called back?

There is no good reason to use a centralized exchange. People finally seem to be waking up to the fact. Bear in mind that not only is there this clawback issue with your coins, but as part of a Chapter 11 bankruptcy your real name, address, deposits, and transactions are likely to be published in court documents which will be publicly viewable to anyone, just as also happened with Celsius.

The small amount of convenience that a centralized exchange brings over a decentralized exchange is absolutely not worth the massive risk to your coins, your data, your privacy, and your security.

Thanks everyone for coming in and dropping some knowledge.
Yeah, my general sense is now that if you're doing small stuff, I guess you can get away with using these platforms (at the cost of KYC and other bad aspects).
But if you want to spin big money, it is a liability to use these entities. Yikes!
This time I will be fine because I'm a small fish in this big pond.

Zaguru12

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Quote from: o_e_l_e_o on November 16, 2022, 05:15:01 AM

As part of a Chapter 11 bankruptcy, funds which were withdrawn in the 90 days prior to the bankruptcy filing can be clawed back and added to the pot of assets to be distributed. There are suggestions that Celsius are planning to do this during their bankruptcy proceedings, but the process will take many months, if not years, to be finalized.

If you withdrew coins within 90 days of the bankruptcy, then yes, you could see letters in the future demanding you return those funds. This will also be largely dependent on the size your withdrawal, as for small withdrawals it probably isn't worth the time or money to pursue.

Quote from: flame0562 on November 16, 2022, 03:28:22 AM

But if this were true, then I would ask myself: what is the point of ever touching exchanges and even having those withdraw buttons there if any exchange that goes belly up could get enforced by the US to have funds be called back?

There is no good reason to use a centralized exchange. People finally seem to be waking up to the fact. Bear in mind that not only is there this clawback issue with your coins, but as part of a Chapter 11 bankruptcy your real name, address, deposits, and transactions are likely to be published in court documents which will be publicly viewable to anyone, just as also happened with Celsius.

The small amount of convenience that a centralized exchange brings over a decentralized exchange is absolutely not worth the massive risk to your coins, your data, your privacy, and your security.

I'm a bit confuse here, what happens to countries where cryptocurrencies are banned. And a scenerio like this happens. Wouldn't the investor be charged after the fiasco of retuning the funds.

Need clearer explanation please

NotATether

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bitcoincleanup.com / bitmixlist.org

Quote from: Husires on November 16, 2022, 08:31:29 AM

The government stands by the companies, so receiving money after the companies go bankrupt is a long process, and you may get the money in dollars, not in bitcoins.

Will they stand by FTX though? Regulators seem to be circling it like SHIELD agents, now that everyone is pissed off at them and at SBF for how they screwed over the entire crypto industry.

Husires

legendary

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There are two platforms, .US which is subject to United States bankrupt rules and the other is global, and therefore I think that the safety of .US is higher, although bankruptcy cases take many years in the courts, and Mt. Gox case is a good example.

It is possible that you will be asked to return part of the money that you have spent if it is greater than the amount of redistribution of money and according to your account, but the problem will lie if you have gone bankrupt.

The government stands by the companies, so receiving money after the companies go bankrupt is a long process, and you may get the money in dollars, not in bitcoins.

I hope the loss is just a billion dollars.

o_e_l_e_o

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Activity: 2268

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Quote from: flame0562 on November 16, 2022, 03:28:22 AM

So now my obvious questions/doubts are:
"Wait a second, so I could start seeing in the future letters from lawfirms or such saying I gotta give back the money I withdrew so that other people that lost money get some back?"

Potentially, yes.

As part of a Chapter 11 bankruptcy, funds which were withdrawn in the 90 days prior to the bankruptcy filing can be clawed back and added to the pot of assets to be distributed. There are suggestions that Celsius are planning to do this during their bankruptcy proceedings, but the process will take many months, if not years, to be finalized.

If you withdrew coins within 90 days of the bankruptcy, then yes, you could see letters in the future demanding you return those funds. This will also be largely dependent on the size your withdrawal, as for small withdrawals it probably isn't worth the time or money to pursue.

Quote from: flame0562 on November 16, 2022, 03:28:22 AM

But if this were true, then I would ask myself: what is the point of ever touching exchanges and even having those withdraw buttons there if any exchange that goes belly up could get enforced by the US to have funds be called back?

There is no good reason to use a centralized exchange. People finally seem to be waking up to the fact. Bear in mind that not only is there this clawback issue with your coins, but as part of a Chapter 11 bankruptcy your real name, address, deposits, and transactions are likely to be published in court documents which will be publicly viewable to anyone, just as also happened with Celsius.

The small amount of convenience that a centralized exchange brings over a decentralized exchange is absolutely not worth the massive risk to your coins, your data, your privacy, and your security.

flame0562

newbie

Activity: 21

Merit: 21

Hey guys,
I'll keep it short. I buy bitcoin via online exchanges and then also always withdraw to personal wallets.
As I am listening to discussions about how this FTX mess will evolve, I see some folk saying how the US has some Clawback laws in terms of bankruptcy which are there to protect credits that were not paid back.
So now my obvious questions/doubts are:
"Wait a second, so I could start seeing in the future letters from lawfirms or such saying I gotta give back the money I withdrew so that other people that lost money get some back?"
I mean for the creditors it would make sense, and defintely piss off people like me that just use these exchanges as means to get what I want.

But if this were true, then I would ask myself: what is the point of ever touching exchanges and even having those withdraw buttons there if any exchange that goes belly up could get enforced by the US to have funds be called back? (I suppose allied countries will usually assist US actions, to have nice relationships with them. And cuz of KYC they know who you are and put some legal pressure on you).

But yeah, you get the idea.
So could it be that in the future I will be told to give money back because I happened to use FTX?

Thanks for you time!

Topic: Can you be affected by Clawback laws in this whole FTX disaster? (Read 114 times)