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Breaking: Global Settlement Reached in FTX Digital Markets Liquidation

A worldwide settlement between FTX Trading Ltd. and FTX Digital Markets Ltd. was announced on Tuesday, adding a fresh twist to the continuing drama surrounding the spectacular collapse of Sam Bankman-Fried’s insolvent cryptocurrency exchange, FTX.

The settlement hopes to resolve the many financial and legal complications that have arisen as a result of FTX’s simultaneous US bankruptcy and a court-ordered liquidation in the Bahamas.

The US-based parent company of the FTX exchange, FTX Trading Ltd., has signed a worldwide settlement agreement with the joint official liquidators directing the wind-down of FTX Digital Markets Ltd., according to the release. FTX Trading Ltd. filed for Chapter 11 bankruptcy protection. After FTX Trading Ltd. filed for bankruptcy, the FTX subsidiary, which is based in the Bahamas, began the liquidation process.

Preliminary approval of the settlement is required by the Supreme Court of the Bahamas and the US Bankruptcy Court of Delaware. If accepted, the settlement would enable a new approach to synchronizing bankruptcy and liquidation procedures across countries. By working together, the joint liquidators and FTX Trading Ltd. want to consolidate assets, streamline the payment schedule for creditors, and create consistent procedures for determining claim values and managing the litigation.

A Global Pact Ushers in a New Era for FTX Bankruptcy

“The Global Settlement Agreement reflects a novel and mutually beneficial solution to the complex cross-border legal issues raised by the circumstances of the collapse of the FTX group,” said the release.

The following are essential parts of the settlement agreement:

  • In both actions, we are coordinating the distribution amounts and timing for FTX customers to ensure that creditors get fair reimbursements.
  • Giving FTX consumers the option to choose between having their claims handled in the US bankruptcy court or the Bahamas liquidation (with the exception of insiders and certain excluded clients).
  • We are minimising differences by reconciling techniques to value FTX clients’ digital asset claims.
  • Paying out FTX customers’ claims in US dollars as of the petition date, regardless of how much those claims are worth after the bankruptcy.
  • FTT tokens cannot be paid out in any country if considered equity.
  • Reconciling transactions marked for clawback actions in both sessions requires a coordinated preference strategy.
  • Unified know-your-customer processes verify client IDs.

Settlement Offers Hope Amid FTX Wreckage

The parties’ respective operational roles are defined in the settlement. FTX Trading Ltd. will oversee all other recovery operations, while FTX Digital Markets will focus on pursuing particular lawsuits and monetizing assets held in the Bahamas. The parties agreed to fully cooperate and share information.

No FTX 2.0 and New FTX Plan Means Creditors WON’T Receive Any Crypto

In November 2022, FTX folded because of liquidity concerns and charges of mishandled cash. The FTX liquidation agreement represents a significant step in resolving the legal and financial issues surrounding the company. Last month, US authorities convicted business founder Sam Bankman-Fried on seven counts, including wire fraud.

Creditors may be able to get their money back via a more streamlined process, according to the deal. Prospective FTX account holders, please note that this agreement may undergo substantial adjustments before finalization.

Declaring the Global Settlement Agreement “another critical milestone for the FTX Debtors,” the statement was made by the Chief Restructuring Officer and Chief Executive Officer of the FTX Debtors, John. J. Ray III. “I am overjoyed to have reached a conclusive agreement that serves the best interests of our customers. It acknowledges the significant contribution that the Joint Official Liquidators and the Bahamas will make to the worldwide recovery effort.”

When FTX Trading Ltd. submits its disclosure statement to the bankruptcy court, it will provide the court with further information about how the company plans to handle consumer claims.

The agreement signifies a first step toward resolving the existing issue. The announced agreement on Tuesday paves the way for a more coordinated strategy to maximize recoveries for creditors in the concurrent bankruptcy and liquidation processes of FTX.

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