[NEWS] FTX gives up on restarting cryptocurrency exchange service; plans to refund full amount to customers

Andrew Dietderich, a lawyer for FTX, a cryptocurrency exchange that went bankrupt in 2022, said on the 31st that the exchange has abandoned its plans to restructure.

FTX plans to fully repay its customers in the future.

Diedrich told the judge at the hearing, "At this time, we have sufficient funds to fully pay all permitted customer and creditor claims."

FTX is known for being led by former CEO and founder Sam Bankman-Fried. Bankman-Fried was convicted last year of seven criminal counts of defrauding FTX customers and investors. He is scheduled to be sentenced on March 28th and could face up to 115 years in prison.

Diedderich said the reason FTX will not resume its cryptocurrency exchange service is that "the businesses that (FTX) acquired for hundreds of millions of dollars have proven to be almost worthless and there are no interested investors." He added, "We have valuable customer data and information to monetize. But even with exhaustive efforts, we don't have investors willing to put in the capital necessary to restart the exchange, and the costs and risks are prohibitive."

FTX CEO John J. Ray III, who is currently in bankruptcy proceedings, said last year that he had begun the process of soliciting stakeholders to help restart the FTX exchange. As part of the relaunch, FTX had also planned to rebrand and restart.

Full repayment planned, but asset value falls sharply

By abandoning the plan to restart the exchange, FTX will repay its customers in full. Diedrich called this a "turning point for debtors."

However, he said, "there are some caveats," explaining, "Payments will be based on the value on the date of the claim filing. The value of the assets claimed has fallen dramatically during the chaotic period leading up to the filing date. Many customers and creditors will not believe that it is a true full payment from the start. However, we must recognize the application of the claim date in determining asset value."

From these explanations, it can be seen that the value of the assets claimed by creditors has dropped significantly. At the hearing, the motion to convert the crypto assets into US dollars and return them was approved.

Reference:Reuters
Image: Shutterstock

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