FTX, a troubled cryptocurrency exchange, has unveiled its proposal to exit bankruptcy and settle its financial woes with the victims of the platform’s collapse. The company is currently in final discussions with the official creditors committee in an effort to resolve the Chapter 11 bankruptcy proceedings and potentially return customers’ funds.
According to Bloomberg, FTX has submitted a fresh restructuring plan that aims to repay billions of dollars to affected customers. However, the proposal lacks crucial details regarding the scheme and its execution, leaving uncertainty about the exact amount that will be paid to customers. It is estimated that the company owes billions of dollars to customers who were unable to withdraw their funds before the exchange’s collapse.
Moreover, the restructuring team behind the proposal has failed to provide key information about the potential relaunch of the crypto exchange. The submitted plan also lacks clarity on how the company intends to evaluate the value of specific cryptocurrencies on the platform, further adding to creditors’ uncertainty about their potential recovery from the defunct company.
Despite the lack of clarity, FTX plans to send the revised proposal for a vote next year, without disclosing a specific date. The proposed plan may undergo further changes before it goes to US Bankruptcy Judge John Dorsey for final approval.
FTX was once a leading cryptocurrency exchange in the industry, but experienced a liquidity crisis and subsequent collapse last year due to alleged mismanagement of users’ funds. The company’s founder, Sam Bankman-Fried, recently faced legal consequences as he was convicted of fraud and other criminal charges, which led to the downfall of the company in November.
Since the FTX fiasco, the restructuring team has been working to recover funds from various entities, including politicians, corporations, and charities that received monetary gifts and donations from Bankman-Fried prior to the Chapter 11 filing. In September, US Bankruptcy Judge Dorsey authorized the company to sell its crypto holdings in order to recoup customers’ funds and facilitate the exchange’s revival. The company was allowed to sell up to $100 million in cryptocurrencies weekly in order to minimize price volatility.
With the approval, FTX filed an amended proposal to return up to 90% of distributable assets to customers. Additionally, the company received court approval to auction its assets to the highest bidders as part of its efforts to relaunch the company and resume operations despite the fraud charges.
In recent news, an FTX creditor champion revealed that Bullish, a crypto exchange led by former New York Stock Exchange president Tom Farley, fintech startup Figure Technologies, and digital assets venture capital firm Proof Group are the top contenders looking to acquire the firm.
Gary Gensler, the chair of the Securities and Exchange Commission (SEC), expressed support for a reboot of the exchange in an interview, as long as the new leadership operates strictly within the boundaries of the law.
Overall, FTX’s proposal to exit bankruptcy and repay billions to its creditors marks a significant development in the troubled cryptocurrency exchange’s efforts to recover and regain stability. However, the lack of clarity within the proposed plan raises concerns among creditors about the amount they can expect to recover and the future of the relaunched exchange.