4 ms·
FTX took deposits from unaccredited US investors with specific guarantees about what would happen with the money and they filed for bankruptcy in Delaware. I d
by SilverBirch 4y ago
FTX took deposits from unaccredited US investors with specific guarantees about what would happen with the money and they filed for bankruptcy in Delaware.
I don't care about the VCs getting their money, I'm happy they go to zero etc- I'm saying the opposite, the VCs gave a false sense of security to regular folk that FTX was legit, but in reality FTX was telling depositors that they were doing all these things to protect them that they weren't.
At minimum, the regulators should say "Hey, you can't tell people their money is safe if it isn't" (siloed customer accounts etc) at best the regulators should say "Hey, you have to make sure regular consumers are safe if you plan to take money from US consumers".
- freejazz 4y agoWhat does filing for bankruptcy in Delaware have to do with anything?
- HWR_14 4y agoUS law vs. Panamanian law.
- freejazz 4y agoIf its not a US corp they aren't going to apply US bankruptcy law, they will apply the bankruptcy law of the jurisdiction the corp is registered in. They went to the US court because it will be a quicker disposition of the case.
- HWR_14 4y agoThey have a US division. Multinationals going bankrupt seems like there will be issues about which group owns what and the various obligations between them.
- freejazz 4y agoSo the bankruptcy of the US division will have US law, the others will according to their own jurisdictions. > Multinationals going bankrupt seems like there will be issues about which group owns what and the various obligations between them. Yes, which will be decided according to the bankruptcy law of the corp's incorporation, not the one it chooses. You are confusing choice of law with venue.
- HWR_14 4y agoI actually meant that it's really unclear whether FTX-US or FTX-Bahamas (or other subgroups) owns any asset. That's what I meant by "which group owns what".
- freejazz 4y agoOkay, I still don't understand if you got the point that filing for bankruptcy in a DE court doesn't mean you get DE bankruptcy law applied.
- HWR_14 4y agoYou're right, I never addressed that. I didn't know that before this whole thing started, and that seems weird to me. But also it makes some sense that otherwise both divisions would need to be in different courts in different countries and that seems even worse. I assume there is a US or Delaware law that lets them follow the law of other jurisdictions in cases like this. Almost like an economic extradition. I assume the Bahamas would send their own lawyer(s)? But yes, I think I get your point. Thanks for making it, and again for following up.
- freejazz 4y agoIt's called choice of law. Happens in US courts all of the time, parents enforcing an out-of-state divorce court parental agreement after they moved, two people from Ohio who got into a crash in Indiana... us enforcing in Florida, a commercial contract drafted under new york law, just some examples of where a court would use law from a different jurisdiction. Bahamas don't need to send their own attorneys if they don't want to... they aren't necessarily a party to the case. Here, FTX is opting to have a US disposition of the Bahamian bankruptcy code, so what would Bahama have to send attorneys for? In this case, its still adversarial between the creditors and FTX, so there will be parties arguing for the correct application of law.