FTX’s Repayment Plans Exclude Exchange Restart: Bankruptcy Lawyer

FTX, the cryptocurrency exchange that filed for bankruptcy in November 2022, has stated that its restructuring plans do not involve restarting the company but rather focus on fully repaying its users and creditors. During a hearing on January 31 in the United States Bankruptcy Court for the District of Delaware, FTX’s attorney, Andy Dietderich, mentioned that while they could cautiously predict full repayment, there was no guarantee. Dietderich clarified that there are no plans to revive FTX, also known as FTX 2.0, under the current Chapter 11 bankruptcy plan. He explained that they expect to file a disclosure statement in February outlining how customers and general unsecured creditors will eventually be paid in full.

Dietderich stated that no investor has shown interest in providing the necessary capital to restart the offshore exchange, and there has been no buyer interested in acquiring the exchange. He added that the cost and risk of creating a viable exchange from the assets left by former CEO Sam Bankman-Fried were deemed too high. Dietderich also expressed concerns about FTX’s poor financial and company records under Bankman-Fried’s leadership. He criticized LedgerX, which was one of the only solvent arms of FTX when the bankruptcy filing occurred, terming it a “horrible investment.”

Bankman-Fried was found guilty in November 2023 on seven felony counts related to fraud at FTX and Alameda Research. His sentencing hearing is scheduled for March 28. Coinciding with Dietderich’s statement, the price of the FTX Token (FTT) experienced a surge of over 12%, reaching $3.01 before subsequently falling to $2.24.

In December 2023, FTX debtors suggested that claimants be reimbursed based on the prices of their cryptocurrency assets at the time of the bankruptcy filing. For example, Bitcoin (BTC) holders would receive $16,871 while Ether (ETH) holders would be entitled to $1,258. FTX creditors proposed repaying their debts by returning the crypto assets themselves. Judge John Dorsey sided with the debtors in a ruling on January 31, emphasizing that the law was clear on the matter.