May 29, 2024
FTX Debtors and Liquidators Agree on Novel Settlement
Latest Cryptocurrency News

FTX Debtors and Liquidators Agree on “Novel” Settlement

Debtors of the now-defunct FTX cryptocurrency exchange have announced a global settlement with the Joint Official Liquidators for the firm’s Bahamian arm, a significant development in the ongoing bankruptcy proceedings.

In the December 19 announcement, FTX debtors outlined plans to combine assets with FTX Digital Markets, aiming to facilitate fund distribution to users of the collapsed exchange. Described as a “novel and mutually beneficial solution,” the settlement addresses cross-border legal complexities arising from FTX’s November 2022 collapse.

The proposed settlement, contingent on approval by the U.S. Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, involves reimbursing all FTX users without pending claims in U.S. dollars for losses in cash or digital assets (excluding nonfungible tokens). Users eligible for claims can vote on the reimbursement plan in Q2 2024.

“FTT interests against the FTX Debtors and FTX Digital Markets will be treated as equity and not receive any recovery.”

FTX’s CEO, John J. Ray III, emphasized the global settlement as a crucial milestone for the FTX Debtors, acknowledging the challenges posed by conflicting filings of FTX Debtors and FTX Digital Markets. He underscored the shared constituency of customers.

This update is part of FTX’s ongoing bankruptcy proceedings initiated after the exchange’s collapse in November 2022. In November 2023, Sam Bankman-Fried, the former CEO, was found guilty of seven felony counts related to fund misuse between FTX and Alameda Research. His sentencing is scheduled for March.

FTX debtors have consistently filed motions with the Delaware bankruptcy court to sell company assets and repay creditors. Earlier approvals include the sale of LedgerX, $873 million of trust assets, $3.4 billion in digital assets, and a settlement between FTX and Genesis.

Image By freepik

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