FTX, the now-defunct cryptocurrency exchange, has outlined plans in a bankruptcy hearing to prioritise full repayment to its customers rather than relaunching its operations.
During a hearing on January 31 in the United States Bankruptcy Court for the District of Delaware, FTX’s attorney, Andy Dietderich from Sullivan and Cromwell law firm, expressed cautious optimism about fully reimbursing users and creditors. However, he emphasised that this aspiration is an objective rather than a guarantee. Dietderich stated that, as part of the Chapter 11 bankruptcy plan, there are no intentions to revive FTX, referred to as FTX 2.0. He mentioned that there are no investors willing to inject the necessary capital for restarting the offshore exchange, nor has a buyer emerged for its continuity as a functioning entity.
“The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high,” Dietderich added.
Dietderich also highlighted the significant challenges and costs involved in rebuilding a viable exchange given the state of affairs left behind by former CEO Sam Bankman-Fried. The attorney underscored concerns about FTX’s inadequate financial and organisational records under Bankman-Fried’s leadership. Additionally, he mentioned that LedgerX, one of the few FTX arms claimed to be solvent during the bankruptcy filing, was deemed a poor investment.
Bankman-Fried was convicted of seven felony counts related to fraud at FTX and Alameda Research in November 2023, with a sentencing hearing scheduled for March 28. Concurrently with Dietderich’s statements, the price of FTX Token (FTT) experienced a surge followed by a decline. In December 2023, FTX debtors proposed reimbursement to claimants based on cryptocurrency asset prices at the time of bankruptcy, with Bitcoin valued at $16,871 and Ether at $1,258. FTX creditors, however, proposed repayments in crypto assets themselves. Judge John Dorsey ruled in favour of the debtors on January 31, stating that the law was unequivocal on the matter.