FTX, the collapsed cryptocurrency exchange, is making significant strides towards repaying its creditors in full, according to revelations made by the exchange’s bankruptcy lawyers in a recent court session.
However, the manner in which customers’ assets will be assessed for repayment is tied to the fiat value of their crypto holdings during the tumultuous period when the exchange declared bankruptcy.
During the court hearing, FTX’s attorney, Andy Dietderich, representing the law firm Sullivan and Cromwell, cautiously expressed optimism regarding the possibility of complete repayment to both customers and creditors.
Nonetheless, he emphasized that this was an objective projection rather than a guarantee of outcomes.
Dietderich stated, “Based on our results to date and current projections, we anticipate filing a disclosure statement in February describing how customers and general unsecured creditors with allowed claims will eventually be paid in full.”
FTX and its affiliates filed for bankruptcy in November 2022 when Bitcoin’s value was approximately $20,500.
Since then, the crypto market has witnessed a substantial rally, with Bitcoin’s price more than doubling to around $42,000.
Kris Hansen, the FTX Creditor Committee lawyer, pointed out during the court hearing that many claims are based on currencies that experienced significant declines in value in the period leading up to the exchange’s bankruptcy petition.
In a notable announcement, it was confirmed that there are no intentions to relaunch FTX as a cryptocurrency exchange.
Dietderich stated, “No investor is ready to commit the needed capital to a restart of the offshore exchange, nor has a buyer emerged for that exchange as a going concern.
The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high.”
FTX was once the world’s second-largest cryptocurrency exchange by trading volume but faced a rapid downfall due to questionable business practices associated with its founder, Sam Bankman-Fried. Bankman-Fried has been found guilty of seven criminal charges and is currently awaiting trial.
In the meantime, the bankruptcy administrators of FTX have been actively selling digital assets, as the cash reserves held at the end of December had grown to $4.4 billion.