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FTX Vows for Customer Repayment but Not to Restart the Exchange, Says the Bankruptcy Lawyer

FTX’s legal team stated that investors were unwilling to invest the required capital for the launch of FTX 2.0, pointing to the shortcomings of former CEO Sam Bankman-Fried.

Jay Hicks

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FTX Vows for Customer Repayment but Not to Restart the Exchange, Says the Bankruptcy Lawyer

FTX, the defunct crypto exchange stated its restructuring didn’t involve restarting the company but aimed to fully reimburse users. During a January 31st hearing in the United States Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietderich expressed cautious optimism about fully repaying users and creditors.

However, Dietderich emphasized that this was an objective, not a guarantee. Moreover, the bankruptcy lawyer stated that, after extensive efforts, there were no plans to relaunch FTX, also known as FTX 2.0, within the current Chapter 11 bankruptcy plan. FTX’s legal team stated that investors were unwilling to invest the required capital for the launch of FTX 2.0, pointing to the shortcomings of former CEO Sam Bankman-Fried.

Related: FTX Partners With Galaxy to Stake, Sell and Manage its Extensive Crypto Holdings

According to Dietderich, considering our current results and future expectations, we expect to submit a disclosure statement in February. This statement will outline how customers and general creditors with valid claims will be paid in full. However, no investor is willing to provide the required funds for restarting the offshore exchange, and there is no buyer interested in acquiring it as a functioning business.

Dietderich expressed worries about FTX’s past CEO Sam Bankman-Fried, highlighting issues with managing financial records for assets and employees. The lawyer mentioned that LedgerX, considered solvent during FTX’s bankruptcy filing in November 2022, turned out to be a “horrible investment”.

In November 2023, Bankman-Fried was convicted of seven fraud-related charges at FTX and Alameda Research. His sentencing is set for March 28. Around that time, FTX Token (FTT) jumped over 12%, going from $2.67 to $3.01, but later dropped to $2.24.

FTX debtors suggested compensating claimants in December 2023 based on crypto asset prices during bankruptcy: $16,871 for Bitcoin (BTC) and $1,258 for Ethereum (ETH). The judge, John Dorsey, favoured debtors in a Jan. 31 ruling, stating the law was “very clear” on the issue.

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