FTX to Repay Creditors but Not Restart Exchange: Lawyer

FTX, the bankrupt digital asset trading platform founded by disgraced crypto entrepreneur Sam Bankman-Fried (SBF), has plans to repay the creditors but is not considering restarting its operations after securing external funding and operational changes.

Currently, as per the firm’s bankruptcy lawyer, Andy Dietderich from law firm Sullivan and Cromwell, the exchange’s restructuring plans are not focused on creating an FTX “reboot” but rather on repaying the creditors in full. 

FTX ‘Cautiously’ Predicts Repaying Creditors in Full

In a filing submitted with the United States Bankruptcy Court for the District of Delaware, the FTX attorney stated that the exchange could “cautiously predict” fully repaying users and creditors, but added that this was “an objective” and not a “guarantee.” 

Further, he added that “after an exhaustive effort,” the bankrupt exchange has decided not to focus on a reboot, dubbed FTX 2.0, and rather, pay the creditors in full. 

Repaying Creditors

As reported earlier, Alan R. Rosenberg, a bankruptcy lawyer familiar with the case, said that the FTX bankruptcy will take longer than expected for resolution.

“Based on our results to date and current projections, we anticipate filing a disclosure statement in February describing how customers and general unsecured creditors […] with allowed claims will eventually be paid in full,” said Dietderich. “No investor is ready to commit the needed capital to a restart of the offshore exchange, nor has a buyer emerged for that exchange as a going concern.”

Costs were too High

The collapse of the once multi-billion dollar exchange has been attributed to Bankman-Fried, a former crypto billionaire also known as the ‘white knight’ of the industry. Dietderich reiterated the fact that, under the leadership of SBF, FTX kept poor financial and company records regarding assets and employees.

“The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high,” the bankruptcy lawyer said.

The Trial of the FTX Founder

Bankman-Fried is currently facing prison time after being found guilty of seven charges that were brought by prosecutors against him. The disgraced entrepreneur will return to court on March 28th, 2024, to receive his sentence from New York District Judge Lewis Kaplan. 

Notably, as earlier reported by TheCoinRise, the entrepreneur decided that he wouldn’t be filing a post-trial motion. It is crucial to note that the young entrepreneur could get up to 115 years of jail time owing to the nature and severity of his crimes.