The Securities and Exchange Commission (SEC) has cautioned FTX against repaying creditors in stablecoins or other crypto assets, potentially challenging the legality of such transactions. The warning comes amidst various proposals for maximizing creditor recovery during the FTX bankruptcy proceedings, including relaunching the exchange and distributing tokenized claims.
While some decentralized marketplaces have even started supporting tokenized FTX claims trading, FTX’s current plan is to reimburse creditors in cash or U.S. dollar-pegged stablecoins. However, the SEC’s recent filing emphasizes its right to contest transactions involving crypto assets, particularly “crypto asset securities.”
The SEC also raised concerns about the lack of clarity in the plan regarding the distribution of stablecoins, should that provision be approved. Additionally, the SEC joined the U.S. Trustee in objecting to a discharge provision in the plan that would protect FTX debtors from future legal actions by creditors.
The ongoing FTX bankruptcy proceedings have seen escalating administrative costs, with fees requested by its staff exceeding $800 million. These developments underscore the complexity and uncertainty surrounding the resolution of the FTX collapse, with potential implications for creditors and the broader cryptocurrency industry.
