On Tuesday, bankrupt crypto exchange FTX announced that it had reached a settlement with the liquidators for the Bahamas unit of the exchange.
This resolved a dispute over whether the bankruptcy proceedings of the company in the US should take precedence over its liquidation in the Bahamas.
The settlement
FTX and FTX Digital Markets have agreed to pool their assets and value customer claims using the same approach to ensure that customers in both countries get equal treatment during the insolvency process.
According to FTX, the settlement would enable FTX.com’s customers to decide whether they want to get their repayment from the Bahamian liquidation or the US bankruptcy process.
John Ray, the CEO of FTX, who took charge of the company from the convicted founder of the exchange, Sam Bankman-Fried, called the settlement an important milestone in their efforts to repay customers.
In a statement, he said that the conflicting filings of FTX Digital Markets and FTX Debtors raised some unique challenges that were some of the toughest ones they had had to deal with.
However, he added that they had realized from the get go that they had an overlapping constituency in the form of the customers of FTX.com, the international crypto exchange.
Bahamian liquidation
Peter Greaves and Brian Simms, the Bahamian liquidators, said that they would be able to avoid years of litigation and costs due to the agreement and speed up the process of returning funds to the customers.
Ever since FTX filed for bankruptcy last year in November, it had been at odds with officials in the Bahamas, as its balance sheet had a hole that left 9 million customers facing potential losses of billions.
In March, FTX filed a lawsuit against Bahamian liquidators to get a ruling that the ownership of the assets of the exchange had been wrongfully claimed by them.
The details
As per the terms of the agreement, the asset recovery efforts will be led by the bankruptcy team of FTX based in the US.
These include any potential sale of the intellectual property of the FTX.com exchange, or the exchange itself.
The real estate assets that are based in the Bahamas will be sold by the country’s liquidators and they will also pursue some litigation claims.
The settlement also comprises of an agreement to FTT, the proprietary crypto token of the exchange, as an equity that would be wiped out in the bankruptcy.
Last year, the value of the tokens had become a point of contention between the two sides, as the US team had alleged that most of the assets that the Bahamian liquidators had seized were valueless FTT tokens.
The FTX crypto exchange has committed to use 90% of its assets for paying back customers who suffered due to its collapse last year.
The company intends to repay them in the form of US dollars rather than the crypto assets that were held on the exchange.