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FTX intends to fully repay customers but not restart the exchange

Crypto Exchanges The United States Bankruptcy Court for the District of Delaware on January 31, FTX's legal team, led by attorney Andy Dietderich from Sullivan and Cromwell, asserted that the defunct cryptocurrency exchange's restructuring plans do not involve a "reboot" of the company. Instead, the primary focus lies on fully repaying customers. Dietderich cautiously expressed
FTX intends to fully repay customers but not restart the exchange
The United States Bankruptcy Court for the District of Delaware on January 31, FTX’s legal team, led by attorney Andy Dietderich from Sullivan and Cromwell, asserted that the defunct cryptocurrency exchange’s restructuring plans do not involve a “reboot” of the company. Instead, the primary focus lies on fully repaying customers. Dietderich cautiously expressed optimism about fulfilling this objective but emphasized that it was not a guaranteed outcome.In the context of FTX’s Chapter 11 bankruptcy plan, Dietderich stated that, based on current results and projections, they anticipate filing a disclosure statement in February outlining how customers and unsecured creditors with allowed claims will eventually be repaid in full. Notably, there is no intention to revive FTX, commonly referred to as FTX 2.0, as part of the restructuring efforts. The legal representative cited a lack of investor commitment and the absence of a viable buyer for the exchange.

FTX Customers Seek Privacy in Crypto Bankruptcy Case - PYMNTS.com

Dietderich elaborated on the challenges of resurrecting FTX, highlighting the high costs and risks associated with creating a functional exchange from the state left by former CEO Sam Bankman-Fried. The attorney reiterated concerns regarding poor financial and company record-keeping under Bankman-Fried’s leadership, noting that LedgerX, deemed solvent when FTX filed for bankruptcy in November 2022, had turned out to be a “horrible investment.”

In a parallel development, FTX Token (FTT) experienced a notable price surge of over 12%, reaching $3.01 from $2.67, albeit subsequently retracting to $2.24. This coincided with Dietderich’s announcement during the hearing. The former CEO, Sam Bankman-Fried, was previously found guilty of seven felony counts related to fraud at FTX and Alameda Research in November 2023. His sentencing is scheduled for March 28.

Regarding the proposed reimbursement for claimants, FTX debtors suggested a repayment based on crypto asset prices at the time of bankruptcy, with figures such as $16,871 for Bitcoin and $1,258 for Ether.

FTX creditors proposed “in-kind” repayments for crypto holdings. In a January 31 ruling, Judge John Dorsey sided with the debtors, emphasizing that the law was unequivocal on the matter.

Wasif Shakir

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