Bankrupt crypto exchange FTX Trading has reached a settlement with liquidators for its Bahamas unit, resolving a dispute over whether the company’s U.S. bankruptcy proceedings should be prioritized over the Bahamian liquidation.
The agreement aims to ensure equal treatment for customers in both countries’ insolvency processes, Reuters reported Tuesday (Dec. 19).
According to the settlement, FTX and Bahamian-based FTX Digital Markets will combine their assets and adopt a unified approach to valuing customer claims, the report said. This will allow customers of FTX.com’s international crypto exchange to choose between seeking repayment from the U.S. bankruptcy or the Bahamian liquidation.
FTX CEO John Ray emphasized the significance of the agreement in the company’s efforts to repay customers, according to the report. He acknowledged the challenges posed by conflicting filings but stressed the importance of prioritizing FTX.com customers.
The Bahamian liquidators, Brian Simms and Peter Greaves, welcomed the settlement, stating that it will prevent lengthy litigation and expedite the return of funds to customers, per the report.
FTX had been at odds with Bahamian officials since filing for bankruptcy protection in November 2022, leaving its 9 million customers at risk of losses, the report said.
As part of the settlement, FTX’s U.S.-based bankruptcy team will lead the recovery of assets, which may include selling the FTX.com exchange or its intellectual property, according to the report. The Bahamian liquidators will handle the sale of real estate assets in the Bahamas and pursue specific litigation claims.
Furthermore, the settlement includes an agreement to treat FTX’s proprietary crypto token, FTT, as equity in FTX, the report said. The value of FTT tokens had been a contentious issue between the two parties in the past.
FTX has committed to using at least 90% of its assets to repay customers, per the report. The company intends to repay customers in U.S. dollars rather than cryptocurrency.
The news of this settlement comes three days after FTX filed a proposal that would allow the cryptocurrency exchange to exit bankruptcy. The proposal, filed in bankruptcy court Saturday (Dec. 16), would distribute billions in cash to creditors and customers once the bulk of FTX’s cryptocurrencies are liquidated.
For all PYMNTS crypto coverage, subscribe to the daily Crypto Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More