A crypto exchange has gone bankrupt: how to register as a creditor and hold your place in line
Let us approach this as a problem with four variables. First: what status you hold in relation to the exchange. Second: how much time is left to act. Third: which jurisdiction the proceedings have actually been opened in. Fourth: whether it is worth selling your claim rather than waiting for the distribution. None of these is obvious from the administrator's first official notice — so let us work through them in order.
Variable 1: segregated assets or the common estate
Scenario A: the platform kept client funds legally separate from its own balance sheet. In that case there is a chance to recover them as the owner of the property rather than as a creditor — a different order of priority, different deadlines, and considerably better prospects. For exchanges licensed under MiCA (Regulation (EU) 2023/1114) this is not even an "if" but a statutory duty: Article 70 expressly requires client crypto-assets to be segregated from the provider's own funds in every EU country.
Scenario B: the funds sat in the company's common pool and were used in the exchange's own trading and liquidity. In that case you are one of thousands of unsecured creditors in the general insolvency estate, and the outcome depends on how much is left at all once the company's assets have been sold off.
Which of the two applies is rarely visible at first glance. The answer lies in the terms of use the client accepted at sign-up, in the structure of the exchange's wallets, and in the interim administrator's reports. This is the first thing we establish in any case of this kind.
Variable 2: a deadline that will not wait for the first to be resolved
Insolvency proceedings — in Germany and abroad alike — set a cut-off date for filing claims with the creditors' register. A missed deadline does not always mean an outright refusal. Technically it means a worse position in line: claims filed on time are considered within the main distribution, while late ones follow a separate, far slower track, if they are considered at all.
In practice, most people lose precisely this time to corresponding with the exchange's support desk on their own, hoping for a direct answer. It is futile: support no longer makes decisions — all authority has passed to the interim administrator. Every hour spent waiting for a reply is an hour that should have gone into preparing a formal claim.
Variable 3: the jurisdiction that defines the procedure itself
Where a company is registered and where the insolvency proceedings are actually conducted are two different things, and this is no technical detail. If the proceedings are opened in one EU country, Regulation (EU) 2015/848 on cross-border insolvency automatically recognises them in every other Member State — a creditor in Italy or Poland need not open a separate procedure at home to file a claim against an exchange registered in, say, Estonia. A company registered offshore but in fact administered under a regime such as Chapter 11 in the United States, or a comparable procedure in Singapore, falls under an entirely different framework: there is no such automatic recognition, and the filing deadlines, the language of the documents and, often, the range of accepted proof of ownership all differ.
In practical terms this means that, before preparing a claim on a German or standard European template, we check which court and which procedural law the proceedings have genuinely been opened under. A mistake here costs not money right away but months — a claim filed in the wrong form or with the wrong authority has to be filed again, by which point the more favourable window has already closed.
The recovery percentage in an announced plan is not the same as the real value of what is recovered. In the FTX case, small creditors received roughly 119% of their recognised claim as fixed in dollars on the bankruptcy date — but converted back into the crypto equivalent at current prices, that is substantially less than the value of those same assets at the moment of collapse. A number without context means nothing.
The fourth variable people rarely think of at first: "claim buyers"
The moment the creditors' register becomes public, a market springs up around it: offers to buy out your claim for cash right now, "before the procedure drags on for years." Sometimes this is a legitimate instrument. Sometimes it is a way of buying up claims below their worth from people with no access to an independent assessment of their prospects. Compare the offered sum not against zero, but against a realistic recovery percentage and time frame.
Anyone who promises to "speed up" the handling of your claim for an extra fee is promising something they do not control: priority is set by law, not by a middleman. And an offer to buy the claim at 20–30% of its face value is not always daylight robbery: if a realistic forecast of the distribution three years out is only 25% anyway, selling now for cash may be a rational decision rather than a surrender.
The solution to the equation: years, not months
Large crypto insolvencies rarely conclude in less than two to three years from the date of announcement. Verifying claims, litigating over the status of assets, and the distribution process itself all take time, even in exemplary cases. From the outset we set out for the client an approximate time horizon in writing, together with an assessment of the prospects — so that the decision to sell the claim or wait for the full distribution is taken with the complete equation in view, rather than under the pressure of uncertainty.
In practice the calculation looks like this: expected value = (probability the claim is recognised) × (projected recovery percentage) × (current value of the asset), discounted over the waiting period. This is no abstraction — these are precisely the three factors we set down in a written assessment for every client, with a source behind each figure rather than a guess.
