FTX has ended its attempt to restart its crypto exchange and as a result will liquidate its holdings and seek to pay back its customers and creditors in full, a company attorney told a bankruptcy court judge on Wednesday.
“I would like the court and stakeholders to understand this not as a guarantee, but as an objective,” FTX attorney Andrew Dietderich told Judge John Dorsey of U.S. Bankruptcy Court for the District of Delaware, Bloomberg reported. “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.”
FTX has been reaching out to potential investors and partners in an attempt to revive its exchange, once the world’s third-largest cryptocurrency exchange, according to Investopedia, with an average $10 billion in trading volume per day. (Two days before it declared bankruptcy in late 2022, FTX was still the 5th largest exchange by volume.) Its months-long efforts and negotiations proved unsuccessful because the necessary infrastructure was simply not there, the attorney said.
“FTX was an irresponsible sham created by a convicted felon,” Dietderich said. “The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high,” Reuters reported.
The hearing was for the court to approve a process for paying back clients and customers. Dorsey ruled that the size of each claim will be based on what the customer or creditor was owed on Nov. 11, 2022, the day FTX filed for bankruptcy, according to Bloomberg. Dorsey explained that bankruptcy rules require a company’s debts to be tied to the date it filed for court protection.
Critics pointed out that pegging to the Nov. 11 date will leave customers and clients far from reimbursed “in full.” The markets were in free fall from Nov. 2, when CoinDesk first reported irregularities between FTX and its trading-firm affiliate Alameda Research. Bitcoin was priced roughly $17,000 on the date of the bankruptcy filing, for example. Today it is priced around $43,000.
Good news FTX patrons… you're getting "repaid in full"
The scammers just keep scamming.
— Nebraskangooner (@Nebraskangooner) January 31, 2024