Have you heard of the word "bankruptcy" before?🤔
Let's dig into bankruptcy. Bankruptcy is a legal proceeding that is initiated when a person or business is unable to pay outstanding debts or obligations. The bankruptcy process begins with a petition filed by the debtor, which is the most common, or by the creditors, which is less common. All of the debtor's assets are measured and assessed, and the assets can be used to pay off a portion of the outstanding debt.😁
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Bankruptcy or insolvency is the economic situation in which a company, organization, or individual finds itself when due to its inability to meet its debts. Bankruptcy is said to be a condition where a debtor is unable to pay his debts to creditors. And so the debtor usually files a bankruptcy statement or complaint to let all creditors and necessary stakeholders know that things are out of hand.
And often bankruptcy results from the mismanagement of resources.
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In the year 2022, a few crypto platforms have filed for bankruptcy as we all know. For example Voyager and Celsius, FTX, BlockFi, etc. 👮♂️🚔
Bankruptcy can come in one of two forms. It is not clear to say that using the bankruptcy procedure is a bad idea, although there are situations where it is being misused. That there are people or rather bankrupt projects and there is nothing they could do. And then there are those whose bankruptcy is suspicious and planned.
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Well, I think it can be a good idea and a bad idea at the same time depending on what they have in their reserve or if they are just trying to trick people but If there is a bona fide filing then it is legitimate and important. Although it can be both depending on the part involved. In general, I don't think bankruptcy is beneficial for project owners. Like just look at the FTX issue and where it got them. I think bankruptcy only benefits a few and those are the ones who get paid.
I think bankruptcy declaration is a good way to protect creditors and debtors in the sense that when a company declares itself insolvent, both creditors and debtors are aware of the current situation and settle matters. Will work to do it.
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Do you agree with the fact that bankruptcy is a good practice to protect creditors and debtors and should be maintained or do you think it is a trick used by those who used the customer's funds in their custody for a safe landing?
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To prevent losses from a bankruptcy filing, do you suggest that PoR (Proof of Reserve) should be disclosed to creditors and investors of the respective financial firm?🤔