FTX Trading Ltd Reaches Settlement, but Funds Recovery Delayed Until Q2 2024
FTX Trading Ltd, which has been undergoing bankruptcy proceedings for over a year, has announced a settlement with its Bahamas subsidiary, FTX Digital Markets. However, consumers will have to wait until at least the second quarter of 2024 for their funds to be recovered.
The FTX Settlement Needs the Courts’ Approval
As FTX Trading Ltd falls under the jurisdiction of the United States, it has signed a settlement agreement with its Bahamas subsidiary. The agreement is aimed at enabling cooperation between the two entities as the Bahamas subsidiary undergoes liquidation proceedings in a separate jurisdiction.
However, the settlement agreement still needs approval from both the US Bankruptcy Court and the Supreme Court of the Bahamas.
Voting on Jurisdiction Preference
The agreement focuses on various aspects related to the recovery of consumers’ funds. As part of the settlement, customers of FTX.com will have their funds pooled to ensure equal distribution. In addition, during Q2 2024, customers will have the opportunity to vote on whether they prefer their claims to be paid through the US or the Bahamas jurisdiction.
This means that customers may not be able to recover their funds until at least Q2 2024.
CEO’s Statement
“The Global Settlement Agreement is another critical milestone for the FTX Debtors. The unique challenges raised by the conflicting filings of the FTX Debtors and FTX Digital Markets have been some of the toughest the team has faced. But we recognized at the beginning that we have an overlapping constituency: FTX.com customers. I am thrilled to have achieved a settlement so clearly in customer interests, one that also respects the important role to be played by the Joint Official Liquidators and The Bahamas in the global recovery effort.” – John J. Ray III, CEO of FTX
Impact on FTX Token
Following the announcement of the settlement, the FTX Token (FTT) experienced a significant price increase of nearly 30% within one hour.
Hot Take: Consumers Face Prolonged Wait for Funds Recovery
While FTX Trading Ltd has reached a settlement with its Bahamas subsidiary, the recovery of consumers’ funds is still a lengthy process. With approval from both US and Bahamian courts pending, customers will have to wait until at least Q2 2024 to potentially recover their funds. This delay highlights the challenges faced by FTX Trading Ltd and the importance of ensuring customer interests are prioritized throughout the global recovery effort.
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