According to a report on Wednesday, bankrupt crypto exchange FTX will no longer be pursuing its plans to restart. However, it would fully reimburse its customers and ultimately wind down, the report stated.
Speaking at a bankruptcy hearing in Delaware, FTX’s attorney, Andy Dietderich, noted that the change in plans came after a series of unsuccessful discussions with potential investors. He said none of the bidders were willing to throw in the required chunk of cash to restart the crypto firm.
FTX stated its plan to restart in November after getting a boost from assets recovered from its debtors. However, a more detailed look into the exchange’s balance sheet, the conviction of its co-founder, Bankman-Fried, and other administrative factors dealt that hope a heavy blow.
Investors Lack Belief in FTX
Dietderich stated that the structure of FTX, built by indicted co-founder Sam Bankman-Fried, was too feeble to attract the heavy investment needed to restart the exchange. He said that the technology and administration the FTX founders set up were not business-worthy and made building on them way too risky for interested investors.
“FTX was an irresponsible sham created by a convicted felon. The cost and risk of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high,” Dietderich said.
Hence, FTX’s bankruptcy team would now focus on completely liquidating the exchange’s assets, repaying customers fully, and closing down. Dietderich called on customers and other creditors to be more patient, as asset recovery and other processes could take some time.
November Prices Still Stand
One of the deliberations at the bankruptcy hearing on Wednesday included agitations from customers about FTX’s decision to repay them using the prices of their assets when they filed for bankruptcy back in November.
Straightening things up, the presiding judge, John Dorsey, stated that the narrative would stand as bankruptcy law clearly states that an estate would recompense its creditors according to their asset’s value on the date the debtor filed for bankruptcy. Hence, creditors would endure a significant asset value drop, as cryptocurrencies like Bitcoin and SOL are up over 200% at the current market price.
“The US bankruptcy law is very clear. I have no wiggle room on that.” Dorsey stated.
FTX’s native token, FTT, grappled with news that the exchange would not restart, jumping over 20% to $3.2 before dumping to $2.1. At press time, FTT is trading at $2.25.
