FTX Trading, the bankrupt cryptocurrency exchange, announced on Tuesday that it had reached a settlement with the liquidators of FTX's Bahamas subsidiary, resolving a long-running dispute over whether the company's U.S. bankruptcy proceedings should take precedence over liquidation in the Bahamas.
FTX and FTX Digital Markets have agreed to pool their assets and coordinate their approach to assessing customer claims to ensure that customers are treated equally in bankruptcy proceedings in either country. According to FTX, the settlement agreement will allow FTXThe majority of clients of com's international cryptocurrency exchange choose whether to seek repayment from the U.S. bankruptcy or the Bahamian liquidation.
FTX CEO John Ray took over the company from convicted FTX founder Sam Bankman-Fried. John Wray said the agreement is an important milestone in the company's efforts to repay customer debt.
The unique challenges posed by conflicting documents from FTX debtors and the FTX digital marketplace are among the toughest challenges our team has faced. "But we recognized from the beginning that we had one overlapping constituency: FTX."com. ”
The Bahamas' liquidators, Brian Simms and Peter Gre**es, said in a statement that the agreement would avoid "years of protracted litigation and expense" and "expedite the return of funds to clients."
Since filing for bankruptcy protection on Nov. 11, FTX has been at odds with the Bahamas**, with holes in its balance sheet exposing its 9 million customers to billions of dollars in potential losses. In March of this year, FTX sued the liquidators of the Bahamas, asking the court to rule that the liquidators falsely claimed ownership of the exchange's assets.
Under the agreement, FTX's U.S.-based bankruptcy team will lead asset recovery efforts, including potentially FTXcom Exchange or its intellectual property. The Bahamas liquidators will be responsible for the real estate assets in the Bahamas and seek certain litigation claims.
The settlement also includes an agreement to take FTX's proprietary crypto token, FTT, as an equity stake in FTX, which will be erased in the event of the company's bankruptcy. The value of the FTT token has been a point of contention on both sides last year, when FTX's US team claimed that most of the assets seized by the Bahamian liquidators were worthless FTT tokens.
FTX, which collapsed in November 2022, has promised to repay customers with at least 90% of its assets. The company plans to pay customers in dollars instead of cryptocurrency.