The last two years have made one fact clear: crypto bankruptcies are unlike anything creditors have seen before. From FTX to Prime Trust, courts are being asked to decide fundamental issues: what value applies to token transfers, whether Know Your Customer (KYC) documentation controls recovery, and how volatile assets should be treated in clawback litigation.
As an attorney focused exclusively on representing creditors in complex bankruptcy matters, I see several urgent lessons for commercial creditors and institutions holding crypto claims:
1. Proofs of Claim Are No Longer “Just Forms”
In FTX, the debtor has begun disputing proofs of claim — citing deficiencies, duplicates, and lack of supporting evidence. Many creditors are learning the hard way that a hastily filed claim can result in disallowance or severe limitations on recovery. For institutional vendors, SaaS providers, and custodians, this is more than a procedural risk — it can mean the loss of millions in claims.
2. KYC Documentation Can Make or Break a Claim
The Prime Trust bankruptcy highlights another emerging risk: KYC compliance. Courts are questioning whether creditors can prove identity and transaction legitimacy. Without proper KYC records, creditors risk outright disqualification of their claims or vulnerability to adversary proceedings.
3. Valuation Disputes Are Inevitable
Traditional bankruptcies value claims in dollars, not tokens. But in crypto cases, courts often peg value at the time of transfer — not at today’s market rate. That means a creditor who received $100,000 worth of tokens in 2021 may be forced to return that full value in a clawback action, even if those tokens are now worth a fraction.
4. Volatility Creates Leverage — and Exposure
Crypto’s volatility cuts both ways. While debtors argue that inflated past values increase clawback risk, creditors can use volatility to argue ordinary course of business defenses or demonstrate inequitable exposure. But these arguments require strategic, early positioning — not reactive defense.
Legal Insight
Crypto bankruptcies are still evolving. Courts are applying traditional Chapter 11 frameworks to assets that don’t behave like dollars. That creates both risk and opportunity for creditors. Those who position claims strategically from the start are far more likely to survive objections, defend clawbacks, and maximize recovery.
At The Law Office of Magdalena Zalewski, we represent creditors in crypto bankruptcies nationwide — bringing the same strategic defenses that have protected suppliers, SaaS vendors, and financial institutions in some of the largest Chapter 11 cases in the U.S.
Representation is available on a competitive hourly basis, exclusive of costs and expenses. For matters involving urgent timelines or complex multiparty claims, premium terms may apply. We prioritize strategic, results-driven solutions with an emphasis on early resolution whenever appropriate.
📞 If you are a creditor in the FTX or Prime Trust bankruptcies — or if you received token payments that may be at risk — contact us today to protect your position before the window closes.