Partner Nicola McKinney comments on the legal fallout of the FTX collapse in This is Money

November 25, 2022

Partner Nicola McKinney examines the likelihood of legal action in the UK against collapsed cryptocurrency exchange FTX.

Nicola’s comments were published in This is Money, 23 November 2022, and can be read here.

“There are numerous circumstances in which a claim that has foreign components or co-defendants could be started and pursued in the UK. This is dependent on a number of factors, including the nature of the claim, and may require the court’s permission.

Examples might be a contract case where the breach of contract occurred in England or the contract is governed by English law, or a negligence claim if the harm occurred here. Such examples could provide ‘gateways’ for proceedings to be served on a foreign-based defendant, including potential FTX group companies, or individual wrong-doers.

In negligence claims in particular, the residence of the potential claimant is often connected with where the damage happened, and may potentially mean that litigation is brought here. 

If it emerges that there are exchange assets which can be recovered in the UK, if there are corporate entities or directors that are based here, and if the English legal system is perceived as a useful forum for recovery by creditors, it may open the door to potential claims this side of the Atlantic.

Creditors, including investors, will be looking at all their potential recovery options, and this could also include negligence claims against intermediary advisors in England and Wales. A clearer picture will no doubt emerge in the coming weeks and months.”