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- In somewhat unexpected news, FTX, the now bankrupt crypto exchange, expects to repay its creditors and customers in total.
- There was an initial surge of FTX native tokens after the news, but it quickly turned negative, plummeting by 15% on Feb. 1, 2024.
FTX Expects to Repay Its Customers Fully
In the court hearing, the now-defunct crypto exchange FTX plans to repay its customers in bankruptcy liquidation fully.
However, the recovery of assets is only for customers waiting for their money—based on FTX’s actual bankruptcy.
It was when the market was already in a crisis. Notably, customers and creditors of the bankrupt crypto exchange that Sam Bankman-Fried ran will need to prove their losses.
The restructuring advisers will vet millions of claims filed against FTX to weed out those that aren’t legitimate.
I would like the court and stakeholders to understand this not as a guarantee but as an objective. There is still a great amount of work and risk between us and that result. But the objective is within reach, and we have a strategy to achieve it.FTX lawyer Andrew Dietderich said in the court hearing.
US Bankruptcy Judge John Dorsey approved the dates preliminarily, insisting that it’s a point of contention for various claimants.
Bankrupt Crypto Exchange Abandons Restarting Efforts
More importantly, the team supervising the company has shifted its efforts from restarting or reselling the crypto exchange.
The crypto exchange intends to make former clients whole again. In addition, the plans to relaunch would cost too much.
Dietderich admitted that advisers had exhaustively searched for investors to restart the crypto exchange.
However, no one would fully invest the cash needed to revive the defunct exchange. The costs and risks involved are too high compared to what Mr. Bankman-Fried left in the dumpster.
Previously, Sam Bankman-Fried shut down the company and handed control to insolvency experts in 2022. Since then, restructuring advisers have had an uphill task of tracking assets.
It also untangles the complex debt owed to several creditors and customers who invested money and crypto on the platform.
The defunct FTX exchange was in court on Feb 1, 2024, to seek approval and determine how much each customer and creditor is owed.
Roughly 15 million individuals lost 30-35 billion worth of several cryptocurrencies during FTX’s implosion.
How Did the News Affect the Crypto Market?
Market watchers believe this may be the first step toward the right direction for FTX.
However, others believe the move will peg customers’ and creditors’ claims to prices in late 2022.
It will cause them to miss out on the hike in the prices of digital assets. Bitcoin’s (BTC) price has been on a recovery streak, rebounding to more than $43,000 at the time of writing.
This is an uptrend of roughly 110% from its previous price of about $20,500 during FTX’s collapse in Nov 2022.
Meanwhile, FTX native token FTT has been surging. The FTT price is up by roughly 11% after the news of the crypto exchange’s plans.
It, however, fell sharply and is on a downturn trend of about 15% on Feb 1, 2024. Currently, FTT is trading at $1.90.
Sam Bankman-Fried was found guilty of fraud last year before FTX collapsed in 2022.
Will FTX move forward with the plan and fully repay its crypto customers?