Surge in Crypto Prices Makes FTX Bankruptcy Payout Complicated

Hedge Funds Made a Killing on FTX—Then It Got Complicated

The core problem underlying this and other disputes: FTX claim values have jumped as the prospect of a larger eventual payout has grown, thanks in part to a fierce rebound in crypto prices. That means many FTX clients who sold quickly missed out on getting a better price later or securing a direct payout from the FTX estate.

Many sellers, including some sophisticated crypto players, are now demanding bigger payouts, according to court documents and people familiar with the matter. Others have tried to back out entirely, or have tried to find other buyers to take their claims.

Robotic Automation Company Hit With AI-Related Securities Suit

As AI becomes an ever-more present component of many companies’ strategies and operations, one concern is the extent to which this technological shift could affect companies’ litigation risk exposures. One risk companies may face is that in seeking to promote their adoption of AI strategies, companies may be susceptible to allegations that they overstated their AI capabilities or the extent to which the strategies will actually improve results.

In that vein, a securities lawsuit filed last week against the robotic process automation company UiPath alleges that the company’s announced turnaround strategy, in which the company, among other things, rebranded itself as an AI-powered Business Automation Platform, misrepresented the strategy’s likely prospects and success. This lawsuit is the latest example of cases in which companies adopting AI strategies face securities litigation over their AI-related representations. A copy of the June 20, 2024, complaint in the UiPath lawsuit can be found here.

Binance General Counsel Confronts Some of Crypto’s Hardest Tests

Binance’s General Counsel Eleanor Hughes has a lot to keep her busy, ranging from the giant crypto exchange’s testy dispute with Nigerian officials to strict monitoring by US authorities as part of a landmark plea deal.

That plea agreement with the Justice Department and US regulators led to a $4.3 billion corporate penalty and the jailing of co-founder Changpeng “CZ” Zhao for failures that let criminals and terror groups use the exchange.

Bitcoin Prices Drop to Near $62,000 as Mt. Gox Set to Begin BTC, Bitcoin Cash Repayments

Defunct bitcoin exchange Mt. Gox said Monday it will start to distribute assets stolen from clients in a 2014 hack in the first week of July, years after continually moving deadlines.

“The Rehabilitation Trustee has been preparing to make repayments in Bitcoin and Bitcoin Cash under the Rehabilitation Plan,” trustee Nobuaki Kobayashi said in a Monday statement posted on the Mt. Gox website.

“The repayments will be made from the beginning of July 2024,” Kobayashi said, adding that due diligence and certain safety steps will be required before the payments go through.

If a Company Says It’s Ethical, Investors Might Want to Be Skeptical

Companies using trust words were also about 15% more likely to receive a comment letter from the Securities and Exchange Commission asking them to clarify information on their annual report than companies that didn’t use trust words. The SEC often uses comment letters to communicate its concerns with the annual report.

“Companies likely use trust words to project a positive image and better manage information within the annual report, but it seems that no one is really fooled,” says Gopal Krishnan, a professor of accounting at Bentley University in Waltham, Mass., and one of the study’s co-authors.

The authors used a computer program to search for the 21 words in the annual filings of 3,595 companies between 1995 and 2018. In their sample, 1,659 firms used trust words and 1,936 didn’t.