FTX gives up on restarting virtual currency exchange; customers will be refunded in full

9 months ago 61

Unable to find investors, plans to reopen exchange abandoned

A lawyer for the bankrupt cryptocurrency exchange FTX said at a hearing in a Delaware court on the 31st that the company has given up on plans to reopen the exchange. He also said he plans to fully repay former customers.

FTX lawyer Andrew Diedrich said FTX had spent hundreds of millions of dollars acquiring various businesses that turned out to be of little value and there weren’t many interested buyers.

FTX’s advisers said they searched extensively for investors willing to restart the exchange, but none provided the necessary capital.

Diedrich commented, “The cost and risk of starting a realistically viable exchange using what former CEO Bankman Fried left behind was far too high.”

After FTX’s bankruptcy, poor management was revealed, and former CEO Sam Bankman-Fried was found guilty in November in U.S. District Court on all seven charges, including wire fraud, commodity fraud, and securities fraud.

connection: Sam, former CEO of virtual currency exchange FTX, found guilty on all seven charges.

Regarding refund of customer assets

Regarding customer assets, Mr. Diedrich said, “At this time, we anticipate that we have sufficient funds to fully pay all court-granted customer and creditor claims.” On top of that, he continues:

Full payments will be made based on the price on the date the claim is filed. The value of the claimed assets then declined dramatically up to the date of the claim.

Therefore, many customers and creditors will not feel that the refund price is the “full amount.” However, in determining the value of the asset, it is necessary to use the date on which the claim was filed.

This means that the asset value has fallen below the level before and after FTX’s management crisis was discovered. A court judge approved converting the virtual currency into US dollars and reimbursing the debtor.

Diedrich said the team responsible for rebuilding FTX will investigate millions of claims and eliminate any that are unwarranted. Creditors who can prove their losses will be reimbursed. Diedrich said:

We want courts and stakeholders to understand this (representation of full refund of assets) as a current goal, not a guarantee.

There is still a tremendous amount of work and risk between us and that goal. However, we believe that the goal is within reach and we have a strategy to achieve it.

FTX is also selling its investment trusts and other assets in order to distribute dollar-denominated assets to creditors. Since the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF this month, it is reported that around 147 billion yen (approximately $1 billion) worth of GBTC has been sold.

connection:FTX Legacy $1 billion worth of GBTC sold since Bitcoin ETF approval

What is FTX?

A virtual currency exchange led by Bankman-Fried. After its establishment in 2019, it quickly rose to prominence and has grown into a major exchange next to the industry’s largest, Binance. The company subsequently went bankrupt and filed for bankruptcy.

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