FTX Trading has reached a significant agreement with the liquidators of its Bahamian branch, FTX Digital Markets. This deal focuses on resolving the complex issue of whether U.S. bankruptcy rules or Bahamian liquidation rules take precedence.
Pending approval from both the U.S. Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, this agreement signals a crucial step forward in handling intricate crypto insolvency cases.
A Unified Approach for Fair Results
At its core, this agreement promotes collaboration. FTX and FTX Digital Markets plan to combine their assets and standardize their methods for evaluating customer claims. This joint effort aims to ensure equal treatment for clients involved in insolvency processes in both areas.
A notable feature is the flexibility it offers: customers from FTX.com’s global crypto platform can choose to seek reimbursements either through the U.S. bankruptcy route or the Bahamian liquidation process. Such flexibility addresses customer concerns and simplifies the claims process.
FTX Digital Markets also commits to aligning its know-your-customer (KYC) procedures with established standards in the U.S., the Bahamas, and other relevant regions. This alignment emphasizes FTX’s commitment to following various legal standards and adhering to regulations 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. This sale is part of a broader plan to maximize returns from these assets for the benefit of stakeholders.
Read More About This: FTX Liquidates Over $500 Million in Crypto, Reveals Billion-Dollar Payout to Creditors
Leadership Speaks
John J. Ray III, CEO and chief restructuring officer of FTX, acknowledges the challenges of aligning claims between FTX debtors and FTX Digital Markets. He sees this agreement as a significant advancement in addressing these challenges.
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
The agreement states that FTT’s interests in FTX debtors and FTX Digital Markets will be treated as equity. This means these positions will not be eligible for recovery, setting clear guidelines for equity stakeholders in this bankruptcy case.
Also Read: FTX Disaster Spurs CFTC’s Bold Action: Major Announcement on Crypto Regulations
