FTX, once a thriving cryptocurrency exchange market, has officially abandoned its relaunch efforts. Andy Dietderich, an attorney for the company, announced Wednesday that it was focused on liquidating assets to ensure clients are repaid in full.
The decision follows months of negotiations with potential bidders and investors. These talks ultimately did not materialize into sufficient financing to rebuild the exchange.
FTX liquidation leaves customers up in arms
Dietderich emphasized the grim reality behind FTX’s appearance, saying:
“FTX was an irresponsible sham company created by a convicted felon.”
Lawyers pointed to the high costs and risks involved in creating a viable exchange from the remnants of founder Sam Bankman-Fried, who was convicted of fraud. This shift toward clearing highlights a stark acknowledgment of the exchange’s fundamental shortcomings in terms of technology and governance.
Read more: FTX collapse explained: How did Sam Bankman-Fried’s empire fall?
Despite these challenges, FTX has made notable progress in asset recovery, securing more than $7 billion to repay customers. The funds will be paid based on the value of cryptocurrency starting in November 2022, when the market was experiencing a recession.
This decision sparked discontent as customers felt shortchanged, considering that the price of Bitcoin has risen significantly since then.
But U.S. Bankruptcy Judge John Dorsey supported this approach, saying:
“The bankruptcy law speaks for itself and I have an obligation to follow it.”
Closing Bag Funds
Additionally, FTX recently took the strategic step of selling approximately 75% of Grayscale Bitcoin Trust shares (GBTC). It is reported that this sale resulted in a profit of approximately $600 million.
This liquidation is consistent with the court’s approval in September 2023 for FTX to liquidate more than $3.6 billion in assets. Grayscale’s John Hoffman commented on GBTC’s volatility and its role in various investment strategies.
Read more: Who is infamous FTX co-founder Sam Bankman-Fried (SBF)?
As FTX concludes its bankruptcy proceedings, the company has unveiled an offer to return billions of dollars to customers and creditors. This is an important step in resolving the controversial bankruptcy case.
This move by FTX aims to pay off debt and address customer needs, while also bringing to the fore the complexities and risks inherent in the cryptocurrency market.
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