A Collaborative Agreement in Crypto Bankruptcy
FTX Trading has concluded an important agreement with the liquidators of its Bahamian branch, FTX Digital Markets, to address the issue of U.S. bankruptcy rules versus Bahamian liquidation rules.
If approved by the U.S. Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, this agreement will be a crucial step in resolving complex crypto insolvency cases.
A Unified Approach for Fair Results
This agreement focuses on collaboration, combining assets and standardizing methods for evaluating customer claims. This ensures equal treatment for clients in insolvency processes in both areas. Clients from FTX.com’s global crypto platform can seek reimbursements through either the U.S. bankruptcy route or the Bahamian liquidation process, providing flexibility and simplifying the claims process.
FTX Digital Markets commits to aligning its KYC procedures with established standards in the U.S., the Bahamas, and other relevant regions, demonstrating a commitment to following legal standards during bankruptcy proceedings.
Asset Management and Liquidation
The agreement includes the sale of FTX’s real estate assets in the Bahamas, managed by FTX Digital Markets, to maximize returns for stakeholders.
Leadership Speaks
John J. Ray III, CEO of FTX, sees this agreement as a significant advancement in addressing the challenges of aligning claims between FTX debtors and FTX Digital Markets. Brian Simms and Peter Greaves, the Bahamian liquidators, emphasize that the agreement will avoid lengthy legal battles, speed up fund returns, and simplify the overall process.
Implications for Equity Holders
Under the agreement, FTT’s interests in FTX debtors and FTX Digital Markets will be treated as equity, making these positions ineligible for recovery, setting clear guidelines for equity stakeholders in this bankruptcy case.
Hot Take
FTX and FTX Digital Markets’ collaborative agreement to address crypto insolvency cases sets an example of cooperation and fairness in the industry, ultimately benefitting all stakeholders involved.
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