Crypto Company FTX Claims To Pay Debt To Customers And Creditors

The bankrupt FTX crypto exchange plans to pay off debts to consumers and creditors. (Photo; Doc. NDTV)

JAKARTA - The FTX crypto exchange, which went bankrupt in November 2022, claims that it can repay all of their debts to customers and creditors. This was stated in a court hearing on Wednesday, January 24, 2024.

FTX, founded by Sam Bankman-Fried, was the world's second-largest crypto exchange before it collapsed due to a surge in withdrawing funds that revealed a shortage of USD 8 billion (IDR 126 trillion) in their accounts. Bankman-Fried is also accused of fraud and conspiracy by using FTX customer funds to fund its hedge fund, Alameda Research.

In the bankruptcy process, FTX said it had enough assets to repay customers and creditors based on the dollar value of their crypto assets at the time FTX collapsed. However, this does not mean that customers will get back the value of their current crypto assets, which may be higher than the current dollar value.

FTX's lawyer, Andrew Dietderich, said that their goal was to provide "full recovery" to all parties involved, but he also acknowledged that there were still many risks and challenges to face. "We believe the goal is achievable and we have a strategy to achieve it," he said.

Meanwhile, the team overseeing the bankruptcy process decided not to proceed with plans to revive the exchange's operations, because they were considered too expensive and risky. They also think that the FTX business is no longer saved after its reputation was destroyed by the Bankman-Fried scandal.

Bankman-Fried himself has resigned from the position of CEO of FTX and was replaced by John J. Ray III, a lawyer with experience in bankruptcy cases. Bankman-Fried has also been convicted of fraud and conspiracy charges in November 2023, and sentenced to 25 years in prison.

The FTX case has had a major impact on the crypto industry, which has experienced a decline in public prices and trust. US authorities have also stepped up surveillance and law enforcement against other crypto exchanges, such as Binance, which was fined $4 billion for violating anti-money laundering rules.