FTX’s Shocking Move: Abandoning Crypto Exchange for Full Customer Repayment

• FTX cryptocurrency exchange won’t reopen due to a lack of buyer interest, but they plan to fully repay affected customers by November 2022.

• FTX’s bankruptcy lawyers have recovered over $7 billion in assets and aim to prioritize customer reimbursements.

The FTX cryptocurrency exchange has officially confirmed that it will not be resuming operations. Bankruptcy lawyers representing the firm announced this during a recent court hearing, citing a distinct lack of interest from potential buyers. Despite this finality, FTX remains committed to addressing the financial woes of its customers and general unsecured creditors arising from the abrupt shutdown in November 2022 due to a liquidity crisis.

During the hearing held in the United States Bankruptcy Court in the District of Delaware, FTX’s lawyer, Andy Dietderich, provided insights into the company’s Chapter 11 plan. This strategy involves the recovery of substantial funds from affiliated entities and the gradual sale of cryptocurrency holdings to facilitate the repayment process. Mr. Dietderich conveyed cautious optimism, stating,

“Today, we can now cautiously predict some measure of success.” 

He added that based on current results and projections, they anticipate filing a disclosure statement in February, outlining how customers and general unsecured creditors with approved claims will eventually receive full payment.

Mr. Dietderich quickly emphasized that this was not a guarantee but an objective. He acknowledged that there are still considerable challenges and risks ahead but expressed confidence in their strategy to achieve the desired outcome.

The ‘FTX 2.0’ Plan and the Absence of Restart

One of the major setbacks in FTX’s post-collapse journey was the failure of the “FTX 2.0” plan. This initiative aimed to locate a buyer willing to take over the FTX brand and relaunch the exchange. Unfortunately, this, too, ended in disappointment, and the verdict is clear: there is currently no intention to restart the exchange.

Furthermore, Dietderich clarified that their Chapter 11 plan does not include the expectation of any recoveries from a restarted FTX exchange. FTX’s journey as a cryptocurrency exchange has reached its final destination.

Customer Sentiments Amid the Settlement

The big question on everyone’s minds is whether FTX customers will be satisfied with the settlement. Since the exchange’s collapse in 2022, there has been an ongoing effort to find common ground between the former users and FTX. However, it has often been a contentious tug-of-war between the two parties.

In the past, reports suggested that FTX was planning to sell off its crypto assets to repay its customers. However, former users had voiced their grievances, arguing that the new rules were unfair and prevented them from benefiting from the subsequent increase in cryptocurrency values. Current reports indicate that FTX will value the losses incurred by customers based on the cryptocurrency values from 2022. This could result in disappointment among customers hoping for a different outcome.

Addressing why FTX won’t see a relaunch, the debtors have clarified that the cost and risk of salvaging a profitable business from the remnants of FTX were simply too high. The exchange’s former CEO’s conviction on counts of fraud and conspiracy in October further cemented the decision.

Following the news of FTX’s permanent closure, the cryptocurrency token associated with the exchange, FTT, experienced a rollercoaster ride in the market. Initially, FTT’s price surged from $2.65 per token to nearly $3.00. Currently, FTT’s price is down 19% in the past 24 hours, resting at $2.14 as per data by Crypto News Flash.