FTX's Restructuring Prioritizes Full Repayment, No Reboot Planned Amid Bankruptcy
Summary:
The insolvent digital currency exchange, FTX, will not be rebooted as part of its restructuring plan. Rather, the aim is to fully compensate its creditors and customers, though the firm has stressed that this goal is not guaranteed. There are currently no plans to revive FTX amid its ongoing Chapter 11 bankruptcy plan. Furthermore, former FTX CEO, Sam Bankman-Fried, has been convicted on seven counts of fraud and will face sentencing in late March. Meanwhile, the FTX Token saw a 12% increase in price before falling again.
FTX, the insolvent digital currency exchange, has made it clear that their restructuring strategies do not involve a reboot of the company. Instead, the focus is on fully compensating their clients. At a bankruptcy hearing on January 31 in the U.S. District of Delaware, FTX's lawyer, Andy Dietderich from Sullivan and Cromwell, gave a cautious forecast that all users and creditors can expect a full reimbursement. However, he emphasized that this is an aspiration, not a promise. After extensive efforts, there are no plans to resurrect FTX under the ongoing Chapter 11 bankruptcy procedure.
Despite successful progress and current forecasts, Dietderich anticipates submitting a disclosure statement in February. This statement will explain how all customers and unsecured creditors with allowed claims will receive full payment eventually. He added that no potential investor is willing to finance a relaunch of the offshore exchange nor a buyer has shown interest to take over in the current state.
Highlighting the high costs and risks associated with salvaging a functioning exchange from the mess left behind by previous CEO Sam Bankman-Fried, Dietderich asserted that it was not feasible. He renewed the worries about the inadequate financial and company records maintained during Bankman-Fried's tenure. He also labeled LedgerX, one of the only solvent FTX branches at the time of applying for bankruptcy, as a poor investment.
In a related development, Bankman-Fried was convicted of seven charges of fraud in relation to FTX and Alameda Research in November 2023. His sentencing hearing is set for March 28. Concurrently, the FTX Token (FTT) experienced a price surge of over 12% from $2.67 to $3.01 before plummeting to $2.24.
In December 2023, the debtors of FTX suggested reimbursing claimants based on the then-prevailing prices of the cryptocurrencies - $16,871 per Bitcoin (BTC) and $1,258 per Ether (ETH). Conversely, FTX creditors proposed payment in kind for cryptocurrency assets. Judge John Dorsey backed the debtors, confirming in a January 31 verdict that the law on this matter is clear.
Published At
1/31/2024 8:51:32 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.