FTX Ends Two-Year Saga with Full Customer Refunds and Liquidation

FTX has decided to repay its customers fully. According to a Bloomberg report, FTX informed the bankruptcy judge it would refund creditors and customers who could demonstrate their losses. After two years of struggling to reach an agreement, FTX has finally agreed to pay for all the losses incurred by its customers.

During a Wednesday court hearing, FTX attorney Andrew Dietderich stated that restructuring advisers would have to review each of the millions of claims made. This comprehensive review will help eliminate any claims that are not genuine.

According to a report from Reuters, FTX has recovered over $7 billion in assets that it plans to use to repay its customers. Additionally, it has made agreements with different government agencies and creditors. These groups have committed to holding off on pursuing the collection of around $9 billion in claims until they fully refund customers.

FTX has decided not to restart cryptocurrency exchange activities and is now concentrating solely on selling all remaining company assets. After its unexpected collapse in 2022, FTX has spent the last two years trying to negotiate with former clients to refund lost funds.

Unfortunately, these discussions have been marked by ongoing tension and disagreements between the two parties. Earlier reports had hinted at FTX intending to sell some of its remaining crypto assets to compensate its former users.

FTX Bankruptcy: Discontent Over Reimbursement

However, many former customers and users of the now-defunct trading platform had already petitioned the bankruptcy judges to try and change the terms and conditions of their proposed reimbursement. The users argued that the new rules unfairly impeded their ability to recover lost funds and cryptocurrency fully. They were prevented from taking advantage of the year-long surge in virtual asset values that occurred after the FTX crash.

However, Reuters reports indicate that FTX plans to assess customer losses by considering the cryptocurrency’s 2022 value when the exchange collapsed. This approach differs from the initially anticipated valuation method. This decision and methodology can result in huge disappointment among former customers hoping to recoup current value.

The FTX meltdown and bankruptcy also had a knock-on impact that extended into other financial markets. In the weeks after the crash, the broader stock market consistently declined. Investor confidence took a substantial hit, exacerbated by the exchange collapse.

The company’s full liquidation today without plans to resume operations could negatively impact the digital asset market. However, the move ends a two-year-long saga of speculations and negotiations for former exchange customers awaiting refunds.

Related Reading | Circle Launches USDC Integration, Opening Doors to Mobile-First Finance