Defunct crypto exchange FTX expects to pay its customers and creditors back “in full” after the company’s collapse over a year ago left counterparties billions of dollars in the hole.
Given its optimistic projections, the team overseeing the bankruptcy has also dropped plans to potentially relaunch the exchange.
FTX Plans A Full Asset Recovery
During a Wednesday court hearing, FTX lawyer Andrew Dietderich told the judge overseeing the case that 100% repayment still isn’t a “guarantee,” but an attainable “objective” for the bankruptcy. He emphasized:
“There is still a great amount of work, and risk, between us and that result. But we believe the objective is within reach and we have a strategy to achieve it.”
In this case, a “full” recovery would mean fully paying back customers based on the dollar value of their crypto assets at the time the company collapsed, as ruled by US Bankruptcy Judge John Dorsey.
That could prove disappointing for some crypto traders, given that the dollar value of any Bitcoin (BTC) they held on the exchange at the time was worth less than half of what it would be today.
“Many of those claims are premised upon currencies which declined dramatically in value in that tumultuous period leading up to the petition date,” noted Kris Hansen, an FTX Creditor Committee lawyer.
Dietderich added that restructuring advisers still need to sift through millions of claims filed against FTX to determine which ones are legitimate.
Travis Kling, the head of a fund manager that lost its assets within FTX, said the promise for returns is more than he expected, but still “not nearly as positive as it could have been.”
“There’s room for the estate to move off of petition date pricing,” he argued. “Debtors could introduce a waterfall mechanism but they don’t want to do it because they suck.”
Why Not Relaunch FTX?
Regarding an exchange relaunch, debtors determined that it would be to costly and risky to try salvaging a profitable business “from what Mr. Bankman-Fried left in the dumpster.”
The exchange’s former boss was convicted of several counts of fraud and conspiracy in relation to his business in October, including stealing billions of dollars from customers to prop up the exchange’s sister hedge fund, Alameda Research.
FTX’s collapse damaged the surrounding crypto industry via contagion and tarnished reputation. Ever since, U.S. authorities have launched several enforcement actions against the world’s largest crypto exchanges and forced Binance to pay a $4 billion fine for money laundering violations.
The post FTX Bankruptcy Says Customers Will Get 100% Of Their Money Back appeared first on CryptoPotato.