In a surprising turn of events, cryptocurrency exchange FTX has opted against resuming its operations, choosing instead to initiate asset liquidation to reimburse its customers. Reports from Reuters on Wednesday revealed that under US bankruptcy proceedings, repayments would be calculated based on Bitcoin’s value in November 2022, a period when the leading cryptocurrency was trading below $18,000.
The decision has not been well-received by a considerable number of FTX’s customers, who argue that the valuation criterion puts them at a significant disadvantage. Responding to these concerns, US Bankruptcy Judge John Dorsey sided with FTX, emphasizing that US bankruptcy law mandates debts be repaid based on their value at the time of the bankruptcy filing.
“I have no wiggle room on that,” Dorsey stated. “The Bankruptcy Code says what it says, and I am obligated to follow it.”
FTX clarified that immediate repayment won’t be extended to all customers, citing the need for a meticulous investigation to determine the legitimacy of claims. The move has added fuel to the dissatisfaction among users seeking swift reimbursements.
FTX’s CEO, John J. Ray III, had initially expressed optimism about resurrecting the exchange’s operations through partnerships. However, a capital shortfall led the team to abandon this plan, as revealed by FTX attorney Andy Dietderich during a bankruptcy court hearing in Delaware. Dietderich explained that several acquisitions made under the leadership of former CEO Sam Bankman-Fried depreciated, failing to attract investor interest.
Bankman-Fried, the individual responsible for FTX’s bankruptcy at the end of 2022, faced legal consequences as he was found guilty on seven counts of fraud. With his trial set for March 28, he could be looking at a lengthy prison sentence.
Despite the challenges, FTX has managed to recover over $7 billion in assets for customer repayments and has secured agreements with regulatory agencies to prioritize these refunds.
Following the announcement of the repayment plan, the native token of the FTX platform, FTT, witnessed a significant decline, plummeting by approximately 40%. At press time, FTT is trading below $2, marking a decline of over 14% in the last 24 hours, according to data from CoinGecko. The market’s reaction underscores the uncertainty and skepticism surrounding FTX’s future as it navigates through the intricate landscape of bankruptcy proceedings and customer reimbursement.
Key Figures | Values/Statistics |
---|---|
Bitcoin Value (Nov 2022) | Below $18,000 |
FTT Price Decline Post-Repayment Plan | Approximately 40% decline |
Current FTT Price | Trading below $2 |
FTT 24-Hour Price Change | Down over 14% |
Assets Recovered by FTX | Over $7 billion |
Counts of Fraud Against Sam Bankman-Fried | Found guilty on seven counts of fraud |
Sam Bankman-Fried’s Trial Date | March 28 |