FTX’s Repayment Plan Under SEC Scrutiny
The United States Securities and Exchange Commission (SEC) has raised concerns regarding the repayment strategy of the collapsed cryptocurrency exchange, FTX, stating that it may contest the reimbursement plan if it involves utilizing stablecoins to return funds to creditors.
SEC Caution on Stablecoins Repayment
SEC attorneys highlighted in a court submission to the U.S. Bankruptcy Court in Delaware that repaying creditors with stablecoins might not be explicitly against the law. However, the regulatory body retains the right to challenge such repayments, specifically those involving crypto assets pegged to the U.S. dollar.
- The SEC is concerned about FTX’s plan to utilize stablecoins for creditor reimbursements.
- The agency reserves the right to contest such repayments involving US-dollar pegged cryptocurrencies.
FTX’s Strategies for Creditor Repayments
FTX has been exploring various avenues to compensate its creditors following its sudden collapse in November 2022. Some of the strategies considered include reviving the exchange, liquidating assets, and settling claims based on the U.S. dollar value of the assets at the time of bankruptcy.
- FTX has contemplated different approaches to make creditors whole, such as reviving the exchange.
- The latest proposal involves liquidating assets and paying creditors in cash or stablecoins.
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