See More

FTX Scraps Relaunch, Promises Full Customer Repayment (But There’s a Catch)

2 mins
Updated by Kyle Baird
Join our Trading Community on Telegram

In Brief

  • FTX abandons efforts to restart its exchange, opting for a liquidation that aims to fully repay customers.
  • The exchange has been unable to find investors to rebuild its exchange, as revealed by attorney Andy Dietderich.
  • It recently sold 75% of its Grayscale Bitcoin Trust Shares, reportedly securing approximately $600 million.
  • promo

FTX, once a flourishing name in the crypto exchange market, has officially abandoned its efforts to relaunch. The company attorney, Andy Dietderich, announced on Wednesday that the focus has shifted towards asset liquidation to ensure full repayment to its customers.

This decision follows months of negotiations with potential bidders and investors. These talks ultimately did not materialize into sufficient funding for rebuilding the exchange.

FTX Liquidation Has Customers Up in Arms

Dietderich highlighted the grim reality behind FTX’s facade, stating,

“FTX was an irresponsible sham created by a convicted felon.”

The attorney pointed out the high costs and risks associated with creating a viable exchange from the remnants left by founder Sam Bankman-Fried, who has been convicted on fraud charges. This pivot to liquidation underlines a stark admission of the exchange’s foundational shortcomings in technology and administration.

Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell

Despite these challenges, FTX has made notable progress in asset recovery, securing over $7 billion to repay customers. These funds will be disbursed based on cryptocurrency values from November 2022, when the market was experiencing a slump.

This decision has led to customer complaints, as they feel shortchanged, considering the significant rise in Bitcoin’s price since then.

Bitcoin price comparison 2022 to 2024, 130% difference. Source: TradingView
Bitcoin price comparison 2022 to 2024, 130% difference. Source: TradingView

However, US Bankruptcy Judge John Dorsey upheld this approach, stating,

“The Bankruptcy Code says what it says, and I am obligated to follow it.”

Clawing Back Funds

Furthermore, FTX has recently made a strategic move by selling nearly 75% of its Grayscale Bitcoin Trust Shares (GBTC). It reportedly garnered approximately $600 million from this sale.

This liquidation aligns with the court’s approval in September 2023 for the FTX estate to liquidate over $3.6 billion in assets. John Hoffman from Grayscale commented on the volatility of GBTC and its role in diverse investing strategies.

Read more: Who Is Sam Bankman-Fried (SBF), the Infamous FTX Co-Founder?

As FTX nears the conclusion of its bankruptcy proceedings, the company has revealed a proposal to return billions to its customers and creditors. This marks a crucial phase in resolving the controversy-ridden bankruptcy case.

This move by FTX, while aiming to settle its debts and address the needs of its customers, brings to the forefront the complexities and risks inherent in the crypto market.

Top crypto projects in the US | April 2024
Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
This article was initially compiled by an advanced AI, engineered to extract, analyze, and organize information from a broad array of sources. It operates devoid of personal beliefs, emotions, or biases, providing data-centric content. To ensure its relevance, accuracy, and adherence to BeInCrypto’s editorial standards, a human editor meticulously reviewed, edited, and approved the article for publication.

Kyle-Baird.png
Kyle Baird
Kyle migrated from the East Coast USA to South-East Asia after graduating from Pennsylvania's East Stroudsburg University with a Bachelor of Science degree in 2010. Following in the footsteps of his grandfather, Kyle got his start buying stocks and precious metals in his teens. This sparked his interest in learning and writing about cryptocurrencies. He started as a copywriter for Bitcoinist in 2016 before taking on an editor's role at BeInCrypto at the beginning of 2018.
READ FULL BIO
Sponsored
Sponsored