Sadly the FTX bankruptcy leaders decided not to re-organise the FTX crypto exchange, instead decided to compensate all the former FTX customers by 100%.
FTX was the top second-ranked crypto exchange but collapsed badly in Nov 2022, following a ground report of FTX’s financial position which disclosed that FTX was holding its native exchange tokens to show the company’s balance sheet. FTX co-founder & former CEO Sam Bankman-Fried (SBF) misused his power & used the majority of the customers funds for personal needs & expenses gifting as well as high amount political donations.
On 31 Jan 2024, Reuters reported that FTX bankruptcy leadership is almost ready to liquidate the FTX empire fully e.g. FTX holding assets, customers’ crypto assets, and crypto platform services.
According to the report, FTX leadership believes full compensation of customers’ funds is a better option, instead of a reorganisation plan under current circumstances.
FTX attorney Andy Dietderich said at a bankruptcy court hearing in Delaware that FTX leadership failed to bring enough money for the FTX exchange from new investors. Because of FTX’s bad PR post-bankruptcy, the majority of the investors are distancing themselves from this bankrupt crypto exchange.
Also, it was found that using FTX’s infrastructure, built by Sam Bankman-Fried (SBF), to run crypto platforms contains huge risks.
So far FTX bankruptcy leadership team collected $7 billion and they secured full support from all the US government agencies to liquidate the company & repay the funds to customers.
For now, the company is looking to increase the collected funds to $9 billion & obviously it will take time for them.
It is expected that FTX will pay almost 100% of the funds to its creditors.
However, this picture sounds good but in reality, the majority of the FTX customers are not happy with this 100% repayment decision.
Many people reported that the trade price of crypto assets was very down in Nov 2022 (when FTX filed for bankruptcy) and the FTX exchange later sold their holding crypto assets at high.
In short FTX customers demand their holding crypto assets repayment, not fiat money which is equivalent to the actual worth of the crypto account balance during bankruptcy.
Read also: Celsius is ready to exit bankruptcy with a $3 billion distribution plan
FTX decides not to reorganise the exchange but compensate all creditors
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