Defunct crypto exchange FTX plans to repay customers and unsecured creditors in full, attorneys said in a court hearing Wednesday.
“I’d like the court and stakeholders to understand this is not a guarantee,” said attorney Andrew Dietderich, according to Blockworks. “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.”
Restructuring advisers will evaluate customer and creditor claims to determine whether claims are legitimate.
According to a plan that gained preliminary approval from U.S. Bankruptcy Judge John Dorsey, customers will be paid out the value their holdings held at the time of FTX’s November 2022 bankruptcy filing.
Crypto values have gone up significantly in that time, however – Bitcoin, for example, has more than doubled in value – leaving creditors with more to be desired.
“Many of those claims are premised upon currencies which declined dramatically in value in that tumultuous period leading up to the petition date,” FTX Creditor Committee lawyer Kris Hansen said Wednesday, according to CoinDesk.
FTX is also shying away from any plans to reboot the exchange, Dietderich told the court, noting that “no investor is ready to commit the needed capital to a restart of the offshore exchange. Nor has a buyer emerged for that exchange,” according to Blockworks.
“FTX was an irresponsible sham created by a convicted felon,” Dietderich said, per U.S. News. “The costs and risks of creating a viable exchange from what [founder and former CEO Sam] Bankman-Fried left in a dumpster were simply too high.”
The estate, however, still has “valuable customer data and information to monetize,” Dietderich said.
Since filing for bankruptcy, the FTX estate has sold off many of its holdings in effort to collect enough money to repay customers and creditors in full.
According to data seen by CoinDesk, it sold off 22 million shares of Grayscale Bitcoin Trust since GBTC was converted into an exchange-traded fund following Securities and Exchange Commission approval in mid-January. The sale brought FTX’s GBTC holdings down to zero and fetched the exchange nearly $1 billion, CoinDesk reported.
Neobank Dave repurchased a $100 million investment FTX had made in the firm at a discount for $71 million in a transaction that closed earlier this week. Additionally, FTX received court approval Monday to sell its Bahamas real estate. The 38 properties, which largely comprised FTX headquarters and living quarters including a luxury penthouse inhabited by its executives, is worth approximately $222 million.
Bankman-Fried is set to be sentenced next month on seven federal fraud counts related to the collapse of his crypto empire, of which he was found guilty in November.
