No Suitors Will Invest the Required Capital
FTX, the collapsed cryptocurrency exchange, has given up on its efforts to resume operations because none of the potential investors are willing to provide the necessary capital. FTX’s attorney, Andy Dietderich, stated that the failed negotiations with prospective suitors indicate that founder Sam Bankman Fried had never intended for FTX to function as a viable business. Dietderich argued that the costs and risks associated with reviving FTX outweigh any potential benefits.
FTX Focuses on Reimbursement Instead
Instead of restarting the business, FTX will now focus on selling its assets to generate revenue. The funds raised will be used to reimburse users whose assets were locked in when FTX declared bankruptcy. Although the value of most crypto assets, including Bitcoin (BTC), increased significantly after FTX collapsed, the proposed reimbursement will be based on November 2022 prices. This decision has disappointed users who expected to receive compensation based on the current value of their assets.
However, U.S. Bankruptcy Judge John Dorsey supported FTX’s interpretation of the law, stating that debts should be repaid based on their value at the time of the bankruptcy filing.
Hot Take: FTX Abandons Resumption and Controversial Reimbursement Proposal
The collapsed cryptocurrency exchange FTX will not be resuming operations due to the lack of prospective investors willing to invest the required capital. Instead, FTX will focus on selling its assets to reimburse users whose assets were locked in during the bankruptcy. However, this reimbursement proposal, based on November 2022 prices, has caused dissatisfaction among users, despite the significant increase in the value of crypto assets since the collapse. Despite the backlash, the U.S. Bankruptcy Court has supported FTX’s interpretation of the law regarding debt repayment.
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