FTX.com Restructuring Plan to Reinvigorate Offshore Exchange with Crypto Assets

FTX Reorganization Plan

FTX.com has presented its plan to reorganize the bankrupt exchange, which includes categorizing claimants into distinct classes and enabling the exchange to become functional as an offshore entity.

Documents submitted on July 31 include a draft of the reorganization plan that details how the company intends to settle a “massive and complicated” collection of claims. There are 13 classes of claims, including Dotcom customer entitlement claims, U.S. customer claims, and NFTs customer claims.

The global settlement will consider claims in U.S. dollars according to a valuation methodology approved by the Bankruptcy Court and developed by FTX. This includes disagreements over crypto assets held on the FTX.com and FTX US exchanges.

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FTX Recovery Pools and NFTs

FTX plans to set up three primary recovery pools corresponding to segregated assets belonging to FTX.com customers, FTX US customers, and assets not attributed to the two defunct exchanges. NFTs are expected to be returned to customers unless they were “destroyed” or lost, in which case their claims would be placed in either Class 4A or 4B.

The document also acknowledges special “shortfall” claims by the two FTX exchange organizations against the third pool of general assets. This is meant to “compensate” the exchanges for the unauthorized borrowing and misappropriation of crypto assets that former CEO Sam Bankman-Fried and his associates are accused of. Additionally, the filing outlines the cancellation of intercompany claims and the “extinguishment of FTT claims”, meaning FTT holders will not be compensated for their crypto holdings, which was a major factor in the collapse of FTX in 2023.

FTX Exchange Reboot

The final section of the proposed plan for FTX entails liquidating the estates to distribute cash payments to customers and creditors. However, customers may also have the option to select equity, tokens, and other interests associated with a potential revival of the offshore exchange.

In the midst of bankruptcy proceedings, FTX has taken legal action against Bankman-Fried and other related directors in an effort to reclaim over $1 billion in misappropriated funds. The July 20 complaint includes Bankman-Fried, former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, and former FTX engineering director Nishad Singh as defendants.

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