- FTX is not coming back to life anytime soon.
- The exchange is shifting its focus towards reimbursing its users.
- Despite the progress, customers are unhappy.
Since declaring bankruptcy in November 2022, FTX has been relentlessly trying to make its creditors whole again. From scrapping SBF’s questionable deals to even working on reviving its defunct exchange, FTX has been hard at work trying to fix things.
However, after over a year of concerted efforts, the defunct exchange finds itself at a crossroads, leading FTX to make a decisive shift in strategy– abandoning all plans for a revival and focusing on reimbursing its customers in full.
FTX Scraps Exchange After Unsuccessful Bidding Run
The defunct cryptocurrency exchange FTX, formerly run by disgraced founder SBF, is throwing in the towel on its ambitious plans to revive the platform. Instead, the company has made a major shift in its strategy, pledging to focus exclusively on fully reimbursing its customers.
FTX’s decision comes on the heels of unsuccessful negotiations with potential bidders and investors. According to FTX attorney Andy Dietderich, no one was willing to commit enough capital to rebuild the exchange.
Underscoring the challenges of running and operating the exchange, Dietderich asserted:
"FTX was an irresponsible sham created by a convicted felon. The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high."
When are FTX Customers Getting Paid?
Dietderich outlined that customers will be paid in full, with the reimbursement calculations pegged to prices from November 2022, when FTX filed for bankruptcy. According to CoinMarketCap, Bitcoin traded for $16,700 then. At press time, Bitcoin hovered around $42,000.
Addressing customer complaints, Dietderich asserted that US bankruptcy was ‘very clear.’ He stated,
"I have no wiggle room on that. The Bankruptcy Code says what it says, and I am obligated to follow it."
Having recovered over $7 billion in assets to settle its debts to 9 million customers, the defunct exchange has secured agreements with various government regulators. These regulators have consented to await full customer repayment before pursuing claims totaling about $9 billion, as clarified by Dietderich.
Despite the progress, the exchange cautioned customers against anticipating swift reimbursement, citing the ongoing need to investigate the legitimacy of individual claims thoroughly.
On the Flipside
- FTX debtors estimate that customers would receive over 90% of distributable value worldwide if the Bankruptcy Court approves the amendment plan by the end of 2024 Q2.
- FTX recently proposed an unconventional plan to repay its customers – shorting Bitcoin with leverage.
Why This Matters
FTX claimants have been waiting for over a year to become whole again. Shifting from reviving its exchange to a dedicated focus on customer repayment marks a significant and decisive step forward.
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