FTX debtors scrap reboot plans

Lawyers representing FTX in its bankruptcy told a court Wednesday that the former exchange will repay customers in full.

Andrew Dietderich, a lawyer, said that customers and unsecured creditors who can prove their losses “will eventually be paid in full.” Restructuring advisers will assess the claims to separate the legitimate from the illegitimate ones.

“I’d like the court and stakeholders to understand this is not a guarantee,” but an objective, he added. “There is still a great amount of work, and risk, between us and that result. But we believe the objective is within reach and we have a strategy to achieve it.”

The company, which filed for bankruptcy in November 2022, previously suggested that it would reimburse customers in USD for the amounts that their holdings were worth at the time FTX filed for bankruptcy. 

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This means that those who held ether at around $1,200 at the time of filing would be reimbursed at that price point. Ether (ETH) now trades around $2,300. 

Bankruptcy law, FTX argued, means that values offered should be based on the date of bankruptcy despite the gains across crypto since the collapse. Former customers, however, pushed back against the suggested reimbursement values.

“The code is very clear,” Judge John Dorsey said at the hearing. He said that while there are exceptions to the bankruptcy code, the FTX case and the objections do not meet the criteria.

Read more: After 13 months of bankruptcy, FTX files its reorganization plan to end it

As for rebooting FTX, Dietderich said that “no investor is ready to commit the needed capital to a restart of the offshore exchange. Nor has a buyer emerged for that exchange.”

Over 75 bidders were contacted about a possible reboot back in September.

However, the FTX estate still has “valuable customer data and information to monetize.”

“Our current Chapter 11 plan doesn’t include the expectation of any recoveries from a restart of FTX.com,” he added.

The FTX estate has been selling off its crypto holdings, including nearly a billion dollars worth of Grayscale’s bitcoin ETF, according to reports.

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