SEC Reserves Right to Oppose Bankrupt Crypto Exchange FTX’s Plan to Pay Creditors in Stablecoins

The US Securities and Exchange Commission (SEC) may object to a proposed bankruptcy cryptocurrency exchange. FTX To repay creditors using USD pegged stablecoins.

what happenedIn a court filing, the regulator said it reserved its rights to challenge the transactions outlined in the FTX liquidation plan, DeCrypt reported on Monday. The SEC clarified that it “does not have an opinion on the legality of transactions under federal securities laws” but may challenge transactions involving digital currency assets.

The SEC noted that FTX Asset Managers has not identified a distribution agent, which could potentially distribute stablecoins to creditors under the scheme.

See also: Elon Musk Cleared of Dogecoin Market Manipulation Charges

The approved restructuring plan would have allowed debtors to receive up to 118 percent of their claims in cash, but only those who claimed less than $50,000 would be eligible for repayment.

Why does it matter?: The development comes after the cryptocurrency exchange, which failed in November 2022, agreed to a plan to repay between $14.5 billion and $16.3 billion to its creditors, about $5.3 billion more than it owed.

It was a rare outcome in U.S. bankruptcies, where creditors typically receive only a portion of their claims. Most customers are expected to receive 118% of their claims in cash.

Sam Benkman-FriedThe founder of the stock exchange was sentenced to 25 years in prison in March after being convicted of defrauding customers, investors and lenders. The company was forced to liquidate his estate worth $222 million to compensate creditors.

Price action: As of the writing of this article, FTX token FTT/USD The exchange affiliate was trading at $1.29, up 5% in the past 24 hours, according to data from Benzinga Pro.

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Disclaimer: This content was produced in part with the help of Benzinga Neuro and reviewed and published by Benzinga editors.

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