Lawyer Says FTX Has Abandoned Revival Efforts, Judge Certifies Controversial Reimbursement Plan
The collapsed cryptocurrency exchange FTX will not be proceeding with efforts to resume operations because none of the prospective suitors has pledged to invest the needed capital, the company’s attorney has said. A U.S. Bankruptcy Court judge has said FTX’s proposal to reimburse users based on November 2022 is the correct interpretation of the law.
None of FTX’s Suitors Wants to Put in the Required Capital
An attorney for the collapsed cryptocurrency exchange FTX reportedly told a bankruptcy court that the company has abandoned efforts to resume operations because none of the prospective investors is willing to put in the required capital to make this happen. According to Andy Dietderich, the attorney who represented FTX in the bankruptcy court, the exchange’s unsuccessful negotiations with possible suitors showed that jailed founder Sam Bankman Fried (SBF) never intended for FTX to operate as a viable business.
Dietderich argued that the costs and risks associated with reviving FTX far outweighed any benefit that comes with any such revival of the crypto exchange.
“FTX was an irresponsible sham created by a convicted felon. The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high,” Dietderich said on Jan.31.
FTX’s Controversial Reimbursement Proposal
Rather than restarting the business, FTX will now focus on generating revenue from the sale of its assets. The funds raised will be used to reimburse FTX users whose assets were locked in when the crypto exchange filed for bankruptcy in late 2022. At the time of FTX’s sudden collapse, the USD value of many crypto assets, including Bitcoin (BTC), was at its lowest in that year. However, just over a year after FTX’s collapse, the prices of most crypto assets hit their highest in nearly two years, with BTC having grown by 160% in 2023 alone.
Despite Bitcoin’s rise from just under $17,000 in November 2022 to $42,000 by Jan. 31, 2023, the collapsed cryptocurrency firm’s rescue team has proposed to base the reimbursements on November 2022 prices. This decision has angered users who feel short-changed.
However, U.S. Bankruptcy Judge John Dorsey dismissed the users’ complaints in his ruling. He suggested that FTX had correctly interpreted the bankruptcy law, which clearly states that debts should be repaid based on their value at the time of a bankruptcy filing.
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