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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.
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.