What is the FTX International Settlement Agreement?
If FTX Trading Limited has announced a settlement with FTX Digital Markets (the company's Bahamas subsidiary), consumers will have to wait at least until the second quarter of 2024 to get their money back.
FTX Trading Limited has been in bankruptcy proceedings for over a year. Meanwhile, consumers are eagerly waiting to get their money back.
The FTX settlement requires the approval of the courts
As soon as FTX Trading Limited falls under the United States territory, it has signed a memorandum of understanding with the Bahamas jurisdiction. The subsidiary in the Bahamas is currently conducting liquidation proceedings in a separate jurisdiction. Thus, the agreement aims to enable the parties to work together.
Read more: FTX Collapse Explained: How the Sam Bankman-Fried Empire Fell
However, the settlement agreement is yet to be finalized. It requires approval from the US Bankruptcy Court and the Supreme Court of the Bahamas.
The agreement addresses various issues related to the recovery of consumer funds. As part of the FTX settlement, the parties agreed to collect funds of FTX.com customers to ensure equal relative distribution.
During Q2 2024, FTX.com customers will have the opportunity to vote on whether they prefer to have their claims settled in the US or Bahamas jurisdiction. This means that customers won't be able to get their money back until at least Q2 2024.
FTX CEO John J. Ray III said:
“The global settlement agreement is another important milestone for FTX borrowers.
The unique challenges posed by the conflicting documents of FTX Borrowers and FTX Digital Markets are some of the most difficult the team has faced. But early on we knew we had an overlapping constituency: FTX.com customers.
I am very pleased to have a clear agreement on the client's needs, which respects the important role that Joint Authority Liquidations and The Bahamas will play in the global recovery effort.
Read more: Who is FTX's new CEO, John J. Ray III?
After the announcement of the FTX settlement, FTX Token (FTT) rose almost 30% within an hour.
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