SEC Opposes FTX’s Plan to Pay Creditors with Stablecoins

Bittime - The EC issued a strong warning to FTX regarding plans to use stablecoins or other crypto assets as a means of payment to creditors.

FTX Payment Plan 

Currently, FTX plans to pay creditors in cash or stablecoins pegged to the US dollar. However, some creditors suggest that payments be made in the form of crypto assets, not cash. 

Throughout FTX's bankruptcy process, various options have been considered and proposed to maximize creditor recovery. Starting from the relaunch of the FTX exchange to make money for creditors, to the distribution of claims in the form of tokens in new tradable ventures.

However, the idea of ​​relaunching the FTX exchange was rejected as no investors seemed willing to provide the necessary capital to revive the bankrupt exchange. 

Although some creditors have requested distributions in crypto assets, FTX's current plan is to pay out in cash or stablecoins pegged to the US dollar.

Read Also: FTX and Alameda Research Obliged to Pay $12.7 Billion to Creditors  

SEC Concerns Over FTX Plan

One of the main points of the SEC's warning is the lack of clarity in FTX's plan regarding who will be responsible for distributing the stablecoin if the plan is approved. 

While the SEC did not directly state that these actions were illegal, they asserted the right to challenge transactions involving crypto assets in the future.

FTX Bankruptcy Process

Meanwhile, the US bankruptcy watchdog overseeing FTX's bankruptcy process also raised objections. They rejected FTX's efforts to grant debtors immunity from future legal action by creditors. 

According to U.S. Trustee, the plan should be rejected by the courts unless significant changes are made, including the repeal of the provisions granting such immunity.

This statement emphasizes that FTX's bankruptcy process will not only face challenges from the SEC, but also from other US bankruptcy authorities, which apparently do not want to make it easy for FTX to escape legal responsibility.

FTX Bankruptcy Administrative Fees 

The FTX bankruptcy process is not only related to legal issues, but also has a huge financial burden. Administrative costs associated with FTX's bankruptcy continue to increase. 

The charges filed by FTX employees have exceeded 800 million US dollars. This figure reflects how complex the bankruptcy process of one of the largest crypto exchanges in the world is.

These high fees of course add to the burden on creditors who hope to get back some of their assets. In situations like this, decisions about payments to creditors will be very crucial.

Read Also: FTX Restructuring Plan Supported by Over 95% of Creditors!  

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