FTX is a cryptocurrency exchange founded by Sam Bankman-Fried. Image: Shutterstock
Initial plans for an FTX comeback following a tentative approval from the SEC have been scrapped.
A lack of investor funding and interest was the main reason for the abandonment.
The defunct exchange’s focus will now shift to customer repayment, who are collectively owed over AUD $10 billion.
Customers will be paid based on Bitcoin’s 2022 value, rather than its current (and much higher) price point.
After Gary Gensler greenlit a potential shock FTX comeback last year, it appears any plans for a revival have gone down the drain. The most infamous crypto platform of all time, FTX’s collapse in 2022 wiped billions of dollars from the industry and was the catalyst in an icy crypto winter that is only now starting to thaw. With SBF safely behind bars, the new FTX board had considered an astonishing return to trading as soon as 2024 – but that dream has been officially abandoned, according to the company’s lawyers.
No Investors Willing to Fund FTX 2.0
The key to an FTX resuscitation was – like with most things – all down to money. The company needed a significant investment to handle the USD $9 billion (AUD $13.7 billion) customer repayments required while raising capital to get the technology back off the ground. However, even with several interested parties, no investors were willing to give up enough money to satisfy the exchange’s fairly stringent needs. So, as a company attorney said yesterday in an FTX press release, they are instead choosing to focus on paying out their customers in full. So far, the company has recovered about 80% of the assets required to compensate those who lost money in the calamitous 2022 failure.
In an interesting twist, some customers are complaining that the bankruptcy proceedings are short-changing them significantly. Why?
Well, a quirk in the U.S. bankruptcy laws requires that accreditors must be paid out equivalent to the asset’s value at the time of bankruptcy. In the case of FTX, this means holders are being returned approximately USD $16K (AUD $24.36) per BTC, rather than the $40K+ (AUD $60K+) price point it currently sits at.
FTX was also quick to inform customers that they may be waiting a while before seeing their repayments, as they rifle through claims from clients that might be illegitimate. If Mt. Gox’s bankruptcy repayments are anything to go by, it can take up to a decade before the victims even see a cent.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
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