FTX Liquidators Disclose Updated Plan To Pay Creditors

Bankrupt crypto exchange FTX announced on Dec. 19 that it has entered into a settlement with its Bahamas-based subsidiary, FTX Digital Markets, according to a press release. The move comes in response to the challenges that emerged following the FTX group’s collapse in November of the previous year. The proposed settlement is still subject to approval by the Supreme Court of the Bahamas and the US Bankruptcy Court for the District of Delaware.

As per the agreement, FTX and FTX Digital Markets will consolidate their assets and adopt a unified approach to valuing customer claims. All users, excluding those with pending claims, will receive compensation in US dollars for their cash or digital assets losses, excluding nonfungible tokens (NFTs). 

The terms specify that any interests associated with the FTT token held by FTX Debtors and FTX Digital Markets will be categorized as equity and not included in the recovery proceedings. Moreover, the agreement lets customers choose how they get their money back, either through the liquidation proceedings in the Bahamas or the bankruptcy process in the US.

The FTX Debtors entered a Global Settlement Agreement with the Joint Official Liquidators on behalf of FTX Digital Markets Ltd. Read more here: https://t.co/cf5pbFvcEV

— FTX (@FTX_Official) December 19, 2023

John J. Ray III, who became the CEO of FTX following its failure under Sam Bankman-Fried, highlighted the importance of the agreement in the company’s efforts to repay customers. He acknowledged the challenges posed by conflicting filings but emphasized the significance of prioritizing customers. 

Brian Simms and Peter Greaves, the Bahamian liquidators, welcomed the agreement, saying it would prevent lengthy litigation and speed up refunds to customers, per the report. 

Greaves said:

“For the millions of customers of the FTX Group, based across 230 jurisdictions, this is a landmark breakthrough allowing for collaboration in the monetization of assets and the adjudication of customer claims.”

Recovery Of FTX’s Assets 

Under this agreement, FTX’s US-based bankruptcy team will lead the recovery of assets. This includes selling the FTX.com exchange or its intellectual property. Meanwhile, Bahamian liquidators will handle the sale of Bahamas-based real estate assets and pursue specific legal claims. The company has committed to using at least 90% of its assets to pay customers, as per the report.