The bankrupt crypto exchange FTX has given up on its plan to relaunch or sell its platform, citing high costs and risks. Instead, the company is focusing on repaying all of its customers and creditors who can prove their losses, according to Bloomberg.
FTX filed for bankruptcy in late 2022 after its founder, Sam Bankman-Fried, shut down the exchange and handed over control to insolvency experts. The company faced a complex web of debt and claims from various parties, including customers who deposited cash and crypto on the platform.
Since then, the company has been working to track down and liquidate its assets, including selling off some of its crypto holdings. As a result, FTX’s four largest affiliates have increased the group’s cash pile from about $2.3 billion in late October 2023 to $4.4 billion at the end of the year, according to court documents.
The company’s lawyer, Andrew Dietderich, told US Bankruptcy Judge John Dorsey on Wednesday that FTX’s objective is to repay all of its customers and creditors in full as long as they can verify their claims. He said that this is not a guarantee but a realistic goal that the company has a strategy to achieve.
“I would like the court and stakeholders to understand this not as a guarantee, but as an objective, […] 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, said Dietderich.
FTX Bankruptcy: Claim Validation Process
However, he also said that there are millions of claims that need to be examined and validated and that some of them may not be legitimate. He asked the court to approve a process to determine the size and validity of each claim.
Judge Dorsey agreed to the proposed process and ruled that the claims would be based on what the customers and creditors were owed on the date FTX filed for bankruptcy, as per bankruptcy rules. He rejected the complaints of some customers who wanted their claims to reflect the current prices of digital assets, which have risen since late 2022.
FTX’s future remains uncertain, as the company has abandoned its previous plan to restart or sell its exchange. Dietderich said that the company ran an exhaustive process to find potential investors, but none of them were willing to put up the cash needed to revive the exchange.
He blamed Bankman-Fried for leaving the exchange in a “dumpster” and creating a lot of costs and risks for anyone who would try to restore it. Bankman-Fried, who is also the founder and CEO of another crypto exchange, FTX.US, has not commented publicly on the bankruptcy case.
Related Reading | Bitfinex Lights Up in El Salvador as First Licensed Digital Asset Hub