FTX Says It Expects To Pay Back Customers, But There Are No Guarantees
Disgraced cryptocurrency exchange FTX is now asserting in its bankruptcy case that it will be attempting to repay customers who lost money and can prove it, an attorney for the company claimed in a court hearing on Wednesday that was streamed live on YouTube. "I would like the court and stakeholders to understand this not as a guarantee, but as an objective," said FTX lawyer Andrew Dietderich according to Bloomberg's account of the hearing. "There is still a great amount of work, and risk, between us and that result. But we believe the objective is within reach and we have a strategy to achieve it."
The Verge, meanwhile, noted in its coverage of the hearing that Dietrich also debunked rumors that there were any plans to reopen the exchange. "This hopefully puts to bed the alternative narrative that this business was just fine all along," he added. "It was an irresponsible sham, created by a convicted felon." That convicted felon is Sam Bankman-Fried, who was found guilty on seven fraud charges in November 2023. Bankman-Fried, who's being sentenced in March, stood accused of stealing roughly $10 billion from FTX customers in the charges that were affirmed by the jury verdict.
"The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster were simply too high," added Dietderich, according to comments transcribed by Decrypt. "So our current Chapter 11 plan does not include the expectation of any recoveries from a restarted ftx.com."
Charity returns millions to FTX via bankruptcy settlement
The events of the bankruptcy hearing weren't the only FTX developments this week, though. On Tuesday, Civil Society reported that Effective Ventures Foundations, a charity in the United Kingdom currently under investigation by the Charity Commission, has returned all of the donations it received from FTX to the company's bankrupt estate. The estate includes not just the for-profit FTX company but also its not-for-profit FTX Foundation charity.
"This amount is equal to the entire amount which EV UK received from FTX and the FTX Foundation during 2022," a spokesperson for Effective Ventures Foundations told Civil Society of the $4.3 million (roughly £3.4 million) that the organization returned to the estate. In a separate statement cited by Civil Society, Zachardy Robinson, the interim CEO of Effective Ventures U.S., confirmed that both the U.K. and U.S. wings of the charity had come to a settlement with the bankruptcy trustee overseeing the FTX estate. "As part of these settlements, EV US and EV UK (which I'll collectively refer to as 'EV') have between them paid the estate $26.8m, an amount equal to 100% of the funds the entities received from FTX and the FTX Foundation (which I'll collectively refer to as 'FTX') in 2022," he said.
"All of this money was either originally received from FTX or allocated to pay the settlement with the knowledge and support of their original donor," Robinson continued. "This means that EV's projects can continue to fundraise with confidence that donations won't be used to cover the cost of this settlement. We strongly condemn fraud and the actions underlying Sam Bankman-Fried's conviction."