FTX Creditors Announce Global Settlement Amid Crypto Exchange's Bankruptcy Proceedings
Summary:
FTX cryptocurrency exchange creditors have agreed to a global settlement involving its Bahamian branch as part of ongoing bankruptcy proceedings. The proposed solution involves pooling assets with FTX Digital Markets to distribute funds to members of the defunct exchange. Pending court approval in Delaware and the Bahamas, all FTX users without pending claims will be paid in U.S. dollars for losses, except for nonfungible tokens. The settlement also confirmed that any stakes against FTX creditors and FTX Digital Markets will not recover any returns, treating them as equity.
Creditors of the extinct FTX cryptocurrency exchange have declared a comprehensive agreement alongside its Bahamian entity's Joint Official Liquidators amid insolvency cases. Stated on Dec. 19, FTX creditors aim to consolidate resources with FTX Digital Markets in a bid to distribute wealth to members of the ceased crypto marketplace. Both parties declare this settlement as a pioneering and reciprocally advantageous solution, grounded in transnational legal complexities surrounding FTX's downfall in November 2022.
The planned understanding— contingent on the approval of Delaware's U.S. Bankruptcy Court and the Bahamas' Supreme Court— establishes that all FTX members with unrelinquished claims will be reimbursed in U.S. dollar equivalent for losses in cash or digital assets, excluding nonfungible tokens (NFTs). Qualified members with claims can vote on this reimbursement scheme in the second quarter of 2024.
The proposed settlement further specified that "FTT stakes against the FTX creditors and FTX Digital Markets will be regarded as capital and will not recover any returns."
John J. Ray III, FTX's CEO post Sam Bankman-Fried's exit, stated that "The Global Settlement Agreement affirms a crucial step for FTX Creditors." He added that the intersecting demands of FTX.com customers proved challenging amidst the contrasting filings by FTX creditors and FTX Digital Markets.
FTX creditors entered a Global Settlement Agreement with Joint Official Liquidators representing FTX Digital Markets Ltd.
Related: FTX's bankruptcy costs amount to $53K per hour as per latest filing details
This announcement marks the latest development in FTX’s insolvency saga that initiated after the exchange’s downfall in November 2022. In November 2023, Bankman-Fried was convicted on seven felony charges related to inappropriate fund usage between FTX and Alameda Research. His sentencing is slated for March.
FTX creditors routinely lodge motions with the Delaware Bankruptcy Court to auction company assets and repay claimants. A judge has already approved LedgerX's sale, $873 million of trust assets, $3.4 billion in digital assets, and a settlement between FTX and Genesis.
Magazine: Post FTX's collapse, is there credibility left in crypto exchanges?
Published At
12/19/2023 6:58:14 PM
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