Collapsed cryptocurrency exchange FTX will not be restarted, the firm's bankruptcy lawyers said Wednesday in a court hearing, due to a lack of interest from buyers. However, the company said that it expects to fully repay all "allowed" customers and "general unsecured creditors" affected by November 2022's sudden shutdown amid a liquidity crisis.
In the hearing in United States Bankruptcy Court in the District of Delaware, FTX lawyer Andy Dietderich described the company's current Chapter 11 plan after recovering substantial funds from associated companies and gradually selling cryptocurrency holdings to fund repayments.
"Today, we can now cautiously predict some measure of success," Dietderich said. "Based on our results to date and current projections, we anticipate filing a disclosure statement in February describing how customers and general unsecured creditors with allowed claims will eventually be paid in full."
"I would like the court and stakeholders to understand this is not a guarantee, but as an objective," he continued. "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."
Dietderich described "some disappointments" in the process, including trouble finding interested buyers or a significant return on selling off some pieces of the business. He described FTX's acquisition of derivatives platform LedgerX as "a horrible investment;" it was ultimately sold for $50 million in 2023, a fraction of the nearly $300 million original purchase price in 2021.
Likewise, he called the "FTX 2.0" plan—that is, the attempt to find a buyer to take over the FTX brand and relaunch the exchange—another "disappointment," and affirmed that there's no current plan to restart the exchange.
"We still have valuable customer data and information to monetize," Dietderich said. "But after an exhaustive effort, no investor is ready to commit the needed capital to a restart of the offshore exchange, nor has a buyer emerged for that exchange as a going concern."
Dietderich said that the lack of serious interest is due to the disastrous state of FTX at the time of the collapse. The crypto exchange "was not what it appeared to be," he explained, and only "existed for a few brief years and never acquired substance." He also called out the failed leadership of co-founder and former CEO Sam Bankman-Fried, who was convicted of federal fraud charges in November.
"The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high," Dietderich said. "So our current Chapter 11 plan does not include the expectation of any recoveries from a restarted ftx.com."
He further added that the plan "does not currently include a reboot," but said that any further interested parties should reach out and that the FTX estate is "open to all options" ahead.
FTT, the cryptocurrency token created by FTX, briefly spiked in price Wednesday morning as the news emerged, jumping from $2.65 per token to nearly $3.00, according to CoinGecko. However, the price rapidly plunged as holders sold off their tokens, with the price now down 19% on the day to $2.20.
Editor's note: This story was updated after publication with additional details.
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Source: Decrypt.co
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