The saga of FTX, the once-booming crypto exchange, takes another turn. As of January 31st, 2024, plans to revive the platform have been officially scrapped.
Instead, the company will prioritize returning funds to users caught in the November 2022 collapse.
This decision comes after months of searching for investors willing to breathe new life into FTX. However, the shadow of former CEO Sam Bankman-Fried’s fraud conviction and the exchange’s tarnished reputation proved too much to overcome.
“The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left behind were simply too high,” explained an FTX lawyer.
So, what’s next for FTX users? The plan is to liquidate assets and use the proceeds to repay creditors in full. This process will involve verifying claims and ensuring rightful owners receive their lost funds.
While the exchange itself won’t be making a comeback, its focus has shifted to making wronged users whole.
On the issue of the timeline, It’s difficult to predict an exact date for user repayments. Liquidating assets can be complex, and legal procedures add further time. Expect updates over the coming months as the process unfolds.
Also, if funds fall short, users might receive only a portion of their losses. Prioritizing repayment amounts or other potential measures is still being determined.
Nevertheless, previous users of the exchange will likely need to submit claims verifying their identity and lost funds during the process.
Transparency in situations like this is very crucial, and the FTX team should provide clear instructions and updates throughout the process.
In a Jan. 31 hearing in the United States Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietderich from law firm Sullivan and Cromwell said the exchange could “cautiously predict” fully repaying users and creditors but added this was “an objective” and not a “guarantee.”
While for Bankman-Fried, his trial starts on March 11th, 2024.
Depending on the outcome, he could face significant penalties and potentially be ordered to return funds. This might influence repayment efforts.