In a recent development concerning the defunct cryptocurrency exchange FTX, debtors have announced a significant breakthrough in the form of a global settlement with the Joint Official Liquidators for the company’s Bahamian arm, marking a pivotal step in the bankruptcy proceedings.
The comprehensive settlement, outlined on December 19, aims to merge assets with FTX Digital Markets, facilitating the distribution of funds to users impacted by the collapse of the crypto exchange. Described as a “novel and mutually-beneficial solution,” this agreement addresses complex cross-border legal issues arising from FTX’s downfall in November 2022.
Pending approval from the United States Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, the proposed terms of the settlement signify a redressal plan for all FTX users, not involved in pending court claims. Compensation will be in U.S. dollars, covering losses in cash or digital assets (excluding nonfungible tokens, or NFTs). Eligible users with claims will have the opportunity to vote on the reimbursement plan in the second quarter of 2024.
John J. Ray III, CEO of FTX succeeding Sam Bankman-Fried, expressed the significance of this milestone, stating, “The Global Settlement Agreement is another critical milestone for the FTX Debtors. The unique challenges raised by the conflicting filings of the FTX Debtors and FTX Digital Markets have been some of the toughest the team has faced. But we recognized at the beginning that we have an overlapping constituency: FTX.com customers.”
This announcement represents the most recent development in FTX’s bankruptcy proceedings since the exchange’s collapse in November 2022. Bankman-Fried’s conviction in November 2023 on seven felony counts related to fund misappropriation between FTX and Alameda Research further added complexity to the situation. His sentencing is scheduled for March.
Throughout the bankruptcy process, FTX debtors have consistently filed motions with the Delaware bankruptcy court to divest company assets and reimburse creditors. Already, judicial approval has been granted for the sale of LedgerX, $873 million in trust assets, $3.4 billion in digital assets, and a resolution between FTX and Genesis.
