FTX plans full customer reimbursement, won’t

Bitcoin mining

There was an initial surge in the FTT token after the news turned negative, leaving FTT plummeting 15% today.

According to a court hearing, FTX lawyer Andy Dietderich outlined the company’s current Chapter 11 strategy during the hearing in the United States Bankruptcy Court in the District of Delaware. The plan involves gradually liquidating cryptocurrency assets to make repayments and recovering significant amounts from affiliated firms.

Unfortunately for those who are waiting for their money, the full recovery of client assets is contingent upon the moment of FTX true bankruptcy, which occurred during a period of market turmoil. Judge John Dorsey of the United States Bankruptcy Court initially approved that date, but some claimants disagree.

As of the time of publication, the price of bitcoin has recovered to over $43,000, a 110% increase from its price of about $20,500 at the time of the FTX crash in early November.

A lot of those claims are based on currencies that saw a sharp decline in value in the turbulent period preceding the petition date, attorney Kris Hansen for the FTX Creditor Committee stated during the hearing on Wednesday.

Attorney Andrew Dietderich for FTX claims that the reimbursement plan under consideration by the U.S. bankruptcy court would necessitate claimants to submit proof of their ownership of FTX assets prior to their loss. Restructuring advisors would then assess these submissions. The court records state that the defunct exchange has given up on trying to reconstruct its platform due to a lack of purchasers and has instead concentrated on making its former clients whole.

Following the demise of FTX and its founder, Sam Bankman-Fried, in late 2022, there were demands for further regulation and concerns regarding the stability of centralized exchanges.

Since then, significant cryptocurrency trading platforms have begun to release “proof-of-reserves” to demonstrate their solvency.

Due to the theft of customer savings, FTX and 130 of its affiliates declared bankruptcy in November 2022, unable to honor consumer withdrawals in the midst of a bank run-style collapse.

Sam Bankman-Fried, the exchange’s creator, was found guilty on seven charges of conspiracy and fraud. March 28, 2024, is when his sentence hearing is set to take place. He might spend a maximum of 115 years in prison.