Bankrupt FTX has been long-struggling to repay its former customers. However, the embattled crypto exchange is now riding the “sell-to-pay” route to help reduce its debt. According to Bloomberg reports, FTX is now offloading its assets that are related to cryptocurrencies to pay back customers.

FTX to sell its crypto assets to repay former clients

FTX is liquidating crypto assets and stockpiling money to generate enough amount of cash in hand. According to Bloomberg reports, the embattled crypto exchange is going to use all the cash so generated to repay its customers.

The group’s cash hoard doubled to $4.4 billion at the end of 2023 from roughly $2.3 billion in late October. This was thanks to the combined efforts of the four major affiliates of the fraud-tainted cryptocurrency firm.

FTX finds other ways to repay customers

Since its crash in 2022, FTX has been trying continuously to strike deals with its former customers. Investors who had their accounts frozen during the collapse of the crypto exchanges have been in continuous battles to reach an agreement. However, the bone of contention between the two sides has always been a tug of war.

Previously, former users of the defunct platform were pleading with the judges to alter the terms of their repayment. Reports suggested that former users of FTX claimed that the new regulations unjustly kept them out of a year-long surge in the value of virtual assets.

However, there is a twist to FTX’s cash recovery. The majority of the assets of the firm were lost as a result of the $8 billion fraud case it is currently facing. But it intends to file a lawsuit to get reimbursed for every penny that was spent. FTX may be able to recover billions of dollars if the ongoing legal disputes end up in the debt-ridden exchange operator’s favor.

FTX crash and the market crisis

The collapse of FTX had created a shake in the financial markets across the globe. Concerns about dubious financial assessment methods and FTX’s extremely close association with Alameda caused a wave of customer withdrawals. This sent both companies into bankruptcy and rocked the erratic cryptocurrency market. It is estimated that the market lost billions of dollars and was valued at less than $1 trillion.

Following a month-long trial, the CEO of the embattled crypto exchange was found guilty of the accusations made against him. This individual event wiped out about $26 billion in individual wealth, as reported by Reuters.

The ripple effect of the FTX crash transcended into other financial markets as well. The stock market kept trading in red for weeks after the collapse and investor sentiments dented for a long time. However, the hopes of recovery both for investor sentiments and the crypto exchange are stirring market rumors as FTX is churning out restructuring proposals.

 

The post FTX Crash: Embattled Crypto Exchange Offloads Crypto Assets to Pay Customers appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am