The collapsed crypto exchange FTX expects to repay its creditors fully, its bankruptcy lawyers revealed in court yesterday (Wednesday). However, the customers’ assets will be evaluated based on the fiat value of held crypto assets when the markets were in turmoil at the time of the exchange’s bankruptcy.
Full Repayment in the Plans
In the court hearing, FTX attorney Andy Dietderich from the law firm Sullivan and Cromwell said that the bankrupt exchange could “cautiously predict” a full repayment to the customers and creditors. However, it was “an objective” and not a “guarantee.”
“Based on our results to date and current projections, we anticipate filing a disclosure statement in February describing how customers and general unsecured creditors [...] with allowed claims will eventually be paid in full,” said Dietderich.
FTX and its affiliates filed for bankruptcy in November 2022 when Bitcoin traded at around $20,500. Since then, the crypto market rallied significantly as the value of Bitcoin more than doubled to about $42,000.
“Many of those claims are premised upon currencies which declined dramatically in value in that tumultuous period leading up to the petition date,” the FTX Creditor Committee lawyer, Kris Hansen said during the court hearing.
Restart of Exchange Will Not Happen
The lawyer further confirmed no plans to restart FTX as a cryptocurrency again.
“No investor is ready to commit the needed capital to a restart of the offshore exchange, nor has a buyer emerged for that exchange as a going concern,” said Dietderich. “The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high.”
At its peak, FTX was the second-largest crypto exchange by volume. However, its global operations crumbled within days following the shady business practices of Sam Bankman-Fried surfaced. Bankman-Fried was found guilty of seven criminal charges and is now awaiting trial.
Meanwhile, the bankruptcy administrators of FTX are selling digital assets as the held cash reserves at the end of December increased to $4.4 billion.
