FTX Liquidators and Debtors Hail Mutually Beneficial Settlement
The liquidators and debtors of bankrupt crypto exchange FTX announced reaching a mutually beneficial settlement. The settlement, labeled novel and geared towards solving the critical puzzle for the bankrupt firm, awaits approval from the District of Delaware’s Bankruptcy Court alongside the nod from the Bahamas Supreme Court.
The defunct crypto exchange FTX debtors indicated in a Tuesday, December 19 announcement that the global settlement featured the Joint Official liquidators overseeing the Bahamian bankruptcy proceedings.
Settlement Hands FTT interests Against FTX Digital Markets and Debtors Equity Treatment
The December 19 announcement revealed plans by the FTX debtors and liquidators to pool FTX Digital Markets assets to distribute funds to defunct crypto exchange users. The firms considered the settlement novel and tailored it to solve the cross-border legal issues following the FTX collapse in November last year.
The proposed settlement terms are awaiting approval by the US Delaware District’s Bankruptcy Court and the Bahamas Supreme Court. The settlement accommodates all FTX users without claims pending before the court. Such will receive a settlement in US dollars for cash and digital assets losses with the exception of nonfungible tokens (NFTs).
The settlement urges users eligible for compensation to vote on the reimbursement plant within the following year’s second quarter. The settlement adds that FTT interests claimed against the FTX Digital Markets and Debtors will receive equity treatment, thereby would not earn any recovery.
John Ray III, who replaced Sam Bankman-Fried as FTX chief executive, hailed the Global Settlement Agreement as an invaluable milestone sought by the FTX Debtors. He indicated that the unique challenges FTX Debtors aired conflicted with issues the FTX Digital Markets raised.
FTX Debtors and Liquidators Settlement Affirms Clients as Overlapping Constituency
The conflicting issues harbored the most significant challenge for the bankruptcy team. Nonetheless, he reflected on the initial acknowledgement that the overlapping constituency lies with the FTX.com clients.
The Tuesday announcement is the latest update to signal progress in the ongoing bankruptcy proceedings following the sudden implosion of FTX in November 2022. The collapse dragged along several firms with exposure to the FTX empire, thereby plunging the crypto industry into a longer crypto winter.
The global settlement comes a month after the jury found Bankman-Fried guilty. The November trial indicated that the embattled crypto king was guilty of seven charges involving funds misuse in FTX and Alameda Research. He faces sentencing in March 2024.
The settlement concludes the motions that FTX debtors have filed regularly in their submissions before the Delaware bankruptcy court. The filings sought to sell assets to settle creditors’ dues.
Recently, the court approved the LedgerX sale as trust assets valued at $873 million. Also, the creditors will benefit from the $3.4 billion settlement from Genesis.
