FTX plans to pay customers in full but not to restart exchange, bankruptcy attorney says

The restructuring plans of the defunct cryptocurrency exchange FTX did not include a “reboot” of the company, but focused on paying customers in full.

In a January 31 hearing in the United States Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietrich of the law firm Sullivan & Cromwell said the exchange could “carefully predict” that it would pay users and creditors in full, but said that was not the “goal.” “Guarantee,” he said, “after a diligent effort,” FTX — dubbed FTX 2.0 — had no plans to restart under the current Chapter 11 bankruptcy plan.

Based on our results to date and current projections, we expect to file an official statement in February that will outline how customers and general unsecured creditors are doing. […] Allowed claims will eventually be paid in full,” Dietrich said. No investor is ready to provide the necessary capital to restart the offshore exchange, nor has a buyer come forward for that exchange.

The bankruptcy attorney added:

“If Mr. Banman-Fried left it in the dumps, the costs and risks involved in creating a good exchange were too great.”

Dietrich reiterated concerns that under former CEO Sam Bankman-Fried, FTX had poor financial and company records in terms of assets and personnel. The lawyer said LedgerX – one of the only FTX instruments said to be solvent when the firm files for bankruptcy in November 2022 – was a “terrible investment”.

Related: FTX Claims Price Rally Ahead of Expected Estimates Hearing

Bankman-Fried pleaded guilty in November 2023 to seven felony charges related to fraud by FTX and Alameda Research. A sentencing hearing is scheduled for March 28. At the same time as Dietrich's announcement, the price of FTX Token (FTT) increased by more than 12%. % from $2.67 to $3.01 before falling to $2.24.

In the year In December 2023, FTX debtors claimants will be compensated based on the value of crypto assets at the time of bankruptcy: $16,871 for Bitcoin (BTC) and $1,258 for Ether (ETH). FTX lenders, meanwhile, have offered “in-kind” payments for crypto holdings. In a Jan. 31 ruling that sided with the borrowers, Justice John Dorsey said the law was “very clear” on the issue.

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