Creditors affiliated with the now-defunct cryptocurrency exchange FTX have revealed a global agreement with joint official liquidators concerning the exchange’s arm in the Bahamas, as part of insolvency proceedings. The announcement made on December 19 outlined plans by FTX Debtors to combine assets with FTX Digital Markets. This step aims to facilitate the distribution of funds to users affected by the collapse of the cryptocurrency exchange. The settlement stands as a novel resolution addressing legal complexities arising from the FTX collapse in November 2022.
The proposed settlement's terms, pending approval from the U.S. Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, ensure compensation to all FTX users who have not filed claims in court. Users will receive payment in the United States for losses in cash or digital assets, excluding non-fungible tokens (NFTs). Eligible users holding claims will have the opportunity to vote on the reimbursement plan in the second quarter of 2024. The settlement agreement stipulates that FTX Debtors' FTT interests and FTX Digital Market will be considered equity, exempt from any recovery.
John J. Ray III, who assumed the CEO position at FTX following Sam Bankman-Fried's departure, highlighted the significance of the Global Settlement Agreement. He acknowledged the challenges arising from the conflicting filings of FTX Debtors and FTX Digital Markets. Ray emphasized their shared customer base, recognizing the intertwining nature of FTX.com customers. This announcement marks the latest development in the bankruptcy proceedings initiated after FTX's collapse in November 2022. In November 2023, Bankman-Fried was found guilty of seven felonies associated with fund misappropriation between FTX and Alameda Research. His sentencing is anticipated in March.
As part of the bankruptcy proceedings, FTX debtors consistently file motions in the Delaware bankruptcy court to sell company assets and reimburse creditors. The court has sanctioned the sale of LedgerX, $873 million in trust assets, $3.4 billion in digital assets, and the resolution agreement between FTX and Genesis.
