Collapsed cryptocurrency exchange FTX will not reopen, the company’s bankruptcy lawyers announced Wednesday. court hearingDue to lack of interest from buyers. However, the company said it expects to fully repay both ‘licensed’ customers and ‘general unsecured creditors’ affected by the sudden closure in November 2022 amid a liquidity crisis.
At a hearing in U.S. Bankruptcy Court in the District of Delaware, FTX attorney Andy Dietderich outlined the company’s current Chapter 11 plan after recovering significant funds from related companies and gradually selling its cryptocurrency holdings to fund repayments.
“Today we can carefully predict to some extent whether we will be successful or not,” Dietderich said. “Based on our results to date and current projections, we expect to file a disclosure statement in February setting out how customers and general unsecured creditors whose claims have been accepted will ultimately be paid in full.”
He added, “I hope you understand that this is not a guarantee but a goal.” “There is still a huge amount of work and risk between us and the outcome, but we believe our goals are achievable and we have a strategy to achieve them.”
Dietderich described “some disappointments” along the way, including difficulty finding interested buyers or selling off some businesses for a significant profit. He described FTX’s acquisition of derivatives platform LedgerX as a “terrible investment.” It was ultimately sold for $50 million in 2023, which is almost $300 million compared to the original purchase price in 2021.
Likewise, he confirmed that there are currently no plans to reopen the exchange, calling the ‘FTX 2.0’ plan – an attempt to find a buyer to acquire the FTX brand and restart the exchange – another ‘disappointment’.
“We still have valuable customer data and information that we can monetize,” Dietderich said. “However, despite exhaustive efforts, no investors are prepared to commit the capital required to restart offshore exchanges, and no buyers for such exchanges continue to appear of interest.”
Dietderich said the lack of serious interest was due to FTX’s deplorable state at the time of its collapse. He explained that the cryptocurrency exchange was “not what it seemed.” “It’s only been around for a few years and hasn’t really gained substance,” he explained. He also pointed to leadership failures by co-founder and former CEO Sam Bankman-Fried, who was convicted of federal fraud last November.
“The cost and risk of creating a viable exchange from what Mr. Bankman-Fried had left in the trash was simply too high,” Dietderich said. “Therefore, our current Chapter 11 plan does not include any expectations of recovery of a relaunched ftx.com.”
He also added that the plan “does not currently include a reboot.” However, additional stakeholders will need to be contacted and FTX Assets said “all options are open” going forward.
FTT, the cryptocurrency token created by FTX, saw its price jump from $2.65 per token to nearly $3.00 on Wednesday morning following the news, according to CoinGecko. However, the price plummeted as holders sold their tokens, bringing the current price to $2.20, down 19% on the day.
Editor’s note: This article was updated with additional details after publication.