Bankrupt crypto firm, FTX, has announced its plans to exit bankruptcy and resolve its year-long financial troubles by repaying its affected customers.
According to the report, FTX is in final discussions with the official creditors committee regarding the resolution of the Chapter 11 bankruptcy proceeding and the potential return of customers’ funds.
FTX Creditors to Vote on New Restructuring Plan Next Year
The company submitted a fresh proposal for its restructuring plans to the committee, outlining its intention to repay billions of dollars in cash to affected customers.
However, the proposed reorganizational plan lacks critical information regarding the scheme and its execution, including the exact amount to be paid to customers.
It is estimated that the company owes billions of dollars to customers who could not withdraw their funds before the eventual collapse of the exchange last year.
Additionally, the team behind the restructuring plan has failed to provide key details about the potential reboot of the crypto exchange.
The submitted proposal also lacks clarity on how the company intends to evaluate the value of specific cryptocurrencies on the platform, leaving creditors uncertain about the exact amount they can expect to recover from the defunct company.
Despite the lack of clarity, the company plans to send the revised proposal for a vote next year at an undisclosed date.
The proposed plan could also undergo additional changes before going to US Bankruptcy Judge John Dorsey for final approval.
FTX to Reboot Fallen Exchange
FTX was among the leading crypto exchanges in the industry before its demise last year following a brief liquidity crisis due to alleged mismanagement of users’ funds.
The company’s founder Sam Bankman-Fried, a one-time crypto white knight, was recently convicted in court of fraud and other criminal charges, resulting in the collapse of the company last November.
Since the FTX fiasco, the company’s restructuring team has been trying to recover funds from politicians, corporate, and charity organizations that received monetary gifts and donations from Bankman-Fried before the company’s Chapter 11 filing.
In September, US Bankruptcy Judge Dorsey approved the company’s petition to sell its crypto holdings to recoup customers’ funds and enable the revival of the exchange.
The company was authorized to sell up to $100 million in cryptocurrencies weekly to minimize price volatility.
With the approval, FTX filed an amended proposal to return up to 90% of distributable assets to customers.
As part of its efforts to relaunch the company and resume operations despite being tainted with fraud, the exchange received court approval to auction its assets to the highest bidders.
Last month, an FTX creditor champion posted on X that Bullish, a crypto exchange headed by former New York Stock Exchange (NYSE) president Tom Farley, fintech startup Figure Technologies, and digital assets venture capital firm Proof Group are the three top contenders eyeing to acquire the firm.
3 FTX bidders in the Auction are:
Bullish – Crypto exchange run by Tom Farley
Figure Technologies – fintech start up and
Proof Group – crypto venture-capital firm
Three bidders will be leading a consortium
— Sunil (FTX Creditor Champion) (@sunil_trades) November 8, 2023
Securities and Exchange Commission (SEC) chair Gary Gensler also said in an interview that the agency will support a reboot of the exchange if its new leaders operate strictly under the law.