FTX Plans Full Repayment to Customers Amid Bankruptcy Proceedings
FTX, the embattled cryptocurrency exchange once led by Sam Bankman-Fried, announced its intention to fully repay its customers during a recent court hearing regarding its bankruptcy proceedings.
However, the timeline for this repayment is tied to the date of FTX’s actual bankruptcy, a decision preliminarily approved by U.S. Bankruptcy Judge John Dorsey, sparking debate among claimants.
The announcement comes amidst a rebound in Bitcoin’s price, which surged to over $43,000, marking a 110% increase from its value at the time of FTX’s collapse in early November.
FTX’s Creditor Committee lawyer, Kris Hansen, highlighted challenges faced by claimants, as many of their assets sharply declined in value leading up to the bankruptcy petition date.
Under the proposed repayment process in the U.S. bankruptcy court, claimants must provide evidence of their holdings on FTX, subject to vetting by restructuring advisers.
Andrew Dietderich, FTX’s lawyer, noted the exchange’s shift in focus towards compensating former clients, abandoning plans to relaunch the platform due to a lack of buyers.
In court proceedings, efforts were made to advance the case by securing approvals from individual investors for the repayment approach. Xclaim data indicates that around 15 million people collectively lost $30 billion to $35 billion in various cryptocurrencies following FTX’s collapse.
Following the news, FTX’s native token FTT initially surged over 11% but later declined about 15% for the day on Wednesday.
Bankman-Fried, who faced allegations of misappropriation of customer funds before FTX’s collapse in late 2022, was found guilty last year.