FTX to refund customers at Bitcoin's prices below $18,000
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Crypto exchange FTX has decided against resuming its operations and instead will proceed with asset liquidation to refund its customers, Reuters reported on Wednesday. However, under US bankruptcy proceedings, repayments will be calculated based on Bitcoin’s value in November 2022, specifically when Bitcoin was trading below $18,000.
This decision has sparked dissatisfaction among many of FTX’s customers, who argue that this valuation leaves them at a disadvantage. In response to these complaints, US Bankruptcy Judge John Dorsey sided with FTX, stressing that US bankruptcy law mandates debts be repaid based on their value at the time of the bankruptcy filing.
“I have no wiggle room on that,” Dorsey stated. “The Bankruptcy Code says what it says, and I am obligated to follow it.”
FTX has also clarified that not all customers will be eligible for immediate repayment. The firm highlighted the necessity of conducting a thorough investigation into which claims are legitimate.
FTX CEO, John J. Ray III, previously expressed optimism about finding partners interested in reviving FTX’s operations. However, a capital shortfall forced the team to abandon this relaunch plan, FTX attorney Andy Dietderich revealed at a bankruptcy court hearing in Delaware. He explained that many acquisitions made under the leadership of former CEO, Sam Bankman-Fried, have depreciated, failing to attract investor interest.
Bankman-Fried, who led FTX into bankruptcy at the end of 2022, was found guilty on seven counts of fraud. He is facing a potentially lengthy prison sentence, with his trial set for March 28.
According to Dietderich, FTX has recuperated over $7 billion in assets for customer repayment and has reached agreements with regulatory agencies to prioritize customer refunds.
Following the announcement of the repayment plan, the price of FTT plummeted by around 40%. FTT is trading below $2 at press time, down over 14% in the last 24 hours, according to data from CoinGecko.