FTX abandons resurrection plans in favor of liquidation to fully repay customers affected by collapse

In a important improvement successful the FTX bankruptcy saga, the institution has decided it volition not revive the speech and volition alternatively liquidate its assets to afloat compensate customers affected by its collapse.

The determination was announced by FTX’s attorney, Andy Dietderich, during the exchange’s latest bankruptcy proceeding connected Jan. 31. The exchange’s autochthonal token FTT fell 13.95% pursuing the quality and is presently trading astatine $2.33, according to CryptoSlate data.

Reboot unfeasible

He explained that contempt months of negotiations with imaginable investors and bidders, the institution failed to unafraid capable backing to rebuild the exchange. This deficiency of involvement from investors has been attributed to the inherent flaws successful FTX’s operations, arsenic revealed during the bankruptcy proceedings.

Dietderich said FTX was “fundamentally flawed” and did not person the indispensable exertion and administrative operation to run viably. He pointed to the actions of the company’s founder, Sam Bankman-Fried, who has been convicted of fraud charges, arsenic cardinal to the company’s downfall.

Dietderich added that FTX was an “irresponsible sham” and that resurrecting the speech from its existent authorities would beryllium impractical.

Instead, FTX volition absorption connected liquidating implicit $7 cardinal successful recovered assets to repay customers. These assets were frozen erstwhile FTX filed for bankruptcy successful November 2022. Regulators person reportedly agreed to hold for their claims until aft the speech has repaid its customers.

Arduous repayment process

However, the repayment process is not without contention. Customers person raised concerns implicit the valuation of their repayments, which are based connected cryptocurrency prices arsenic of November 2022 — a play of important marketplace slump.

This valuation method has led to complaints of being shortchanged, particularly fixed the consequent emergence successful cryptocurrency values.

However, U.S. Bankruptcy Judge John Dorsey upheld utilizing November 2022 prices for repayment calculations. He clarified that U.S. bankruptcy instrumentality mandates debts to beryllium repaid based connected their worth erstwhile filing for bankruptcy, leaving nary country for alternate interpretations.

Customers person been cautioned to brace for a perchance lengthy repayment process, arsenic FTX inactive needs to sift done and validate the legitimacy of claims. This improvement comes aft FTX’s melodramatic bankruptcy filing successful November 2022, which near millions of customers facing important fiscal losses.

The station FTX abandons resurrection plans successful favour of liquidation to afloat repay customers affected by collapse appeared archetypal connected CryptoSlate.