In a court hearing on Wednesday, bankruptcy lawyers for FTX said the collapsed crypto exchange will not be restarted because of a lack of interest from investors. The lawyers, however, said that FTX will repay all affected customers in full over the coming months.
During the hearing in the US Bankruptcy Court in Delaware District, FTX attorney Andy Dietderich explained FTX’s current bankruptcy plan after managing to recover a significant amount of money from companies associated with the fallen exchange and selling crypto assets to raise funds for repayments.
Dietderich said the process of raising funds had so far been a success, although there were several challenges. He anticipated that FTX debtors would file a disclosure statement before the end of February explaining how affected users would receive their refunds.
Challenges Faced by FTX Estate in Raising Funds to Repay Customers
One of the challenges that Dietderich said they have encountered is poor returns on selling off a number of FTX-owned businesses. For example, FTX estate sold derivatives trading platform LedgerX for about $50 million, $250 million less than its initial purchase price of $300 million.
Another challenge was the failed attempts to find an investor to buy and relaunch the FTX international exchange. Dietderich claimed that the lack of investor interest in FTX was because of the disastrous state of the exchange at the time it collapsed. Last year, US federal prosecutors’ investigations revealed that FTX former CEO Sam Bankman-Fried and other ex-executives misappropriated customer funds, which were used to place risky bets through trading firm Alameda Research.
Why Investors Show No Interest in Buying FTX
According to the lawyer, the risks and costs of establishing a viable crypto exchange from what Bankman-Fried and other executives left are considerably high, making FTX an unattractive investment to many buyers.
However, Dietderich said the FTX estate was still open to negotiating with interested buyers should they reach out.
Following the latest development, FTX’s native token, FTT, has declined by 19.3% over the past 24 hours to trade at $2.16 as of this writing, according to data from CoinGecko.
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