FTX Chooses Liquidation Over Resumption, Faces Backlash Over Bitcoin Repayment Valuation

Crypto exchange FTX has opted for asset liquidation instead of resuming operations, aiming to refund its customers. However, dissatisfaction arises as repayments will be calculated based on Bitcoin's value in November 2022, with prices below $18,000, leading to discontent among FTX users.

Bitcoin Repayment Controversy

FTX's decision to value Bitcoin for repayments at prices below $18,000 has triggered dissatisfaction among customers who feel disadvantaged. Despite complaints, US Bankruptcy Judge John Dorsey sided with FTX, emphasizing that bankruptcy law mandates debts to be repaid based on their value at the time of filing.

“I have no wiggle room on that,” Dorsey stated. “The Bankruptcy Code says what it says, and I am obligated to follow it.”

FTX clarified that not all customers are immediately eligible for repayment, emphasizing the need for a thorough investigation into legitimate claims.

Failed Resumption Plan and Capital Shortfall

FTX CEO John J. Ray III's optimism about finding partners to revive operations has been dashed due to a capital shortfall, leading to the abandonment of the relaunch plan. Former CEO Sam Bankman-Fried, who led FTX into bankruptcy at the end of 2022, faces legal issues and has been found guilty on seven counts of fraud. The trial is set for March 28.

FTX attorney Andy Dietderich revealed that acquisitions made under Bankman-Fried's leadership have depreciated, failing to attract investor interest. FTX has recovered over $7 billion in assets for customer repayment and secured agreements with regulatory agencies to prioritize customer refunds.

Market Response and FTT Price Plummet

Following the announcement of the repayment plan, the price of FTX's native token, FTT, experienced a sharp decline of around 40%. FTT is currently trading below $2, down over 14% in the last 24 hours, according to CoinGecko data. The market response underscores the challenges and uncertainties surrounding FTX's restructuring and repayment process.