The U.S. Securities and Exchange Commission (SEC) has expressed potential opposition to the plan proposed by bankrupt cryptocurrency exchange FTX to repay its creditors using U.S. dollar-pegged stablecoins. In a court document, the SEC stated it reserves the right to object to the transactions outlined in FTX’s liquidation plan, according to Decrypt.
The SEC clarified that it “is not opining as to the legality, under the federal securities laws, of the transactions” but may challenge transactions involving cryptocurrency assets. The SEC also pointed out a key issue: the FTX estate administrators have not yet identified a distribution agent for the stablecoin payments to creditors.
The approved restructuring plan for FTX aims to repay creditors up to 118% of their claims in cash. However, this generous repayment is only available to those claiming less than $50,000.
This development comes after FTX, which collapsed in November 2022, reached an agreement to repay its creditors between $14.5 billion and $16.3 billion. This represents a remarkable outcome in U.S. bankruptcies where creditors typically receive only a fraction of their claims. The majority of customers are expected to receive 118% of their claims in cash.
Sam Bankman-Fried, the founder of FTX, was sentenced to 25 years in prison in March after being convicted of defrauding customers, investors, and lenders. To compensate creditors, the company liquidated Bankman-Fried’s $222 million worth of real estate.
FTX Token (FTT/USD), tied to the exchange, was trading at $1.29 as of this writing, up 5% in the last 24 hours, according to Benzinga Pro data.
The SEC’s potential opposition to the stablecoin repayment plan raises concerns about the legal complexities surrounding cryptocurrency transactions and highlights the ongoing scrutiny of the industry by regulators.
