The United States Securities and Exchange Commission (SEC) has stated that it may challenge payments to creditors of bankrupt crypto exchange FTX in stablecoins.
SEC Warning
In an August 30 filing to the United States Bankruptcy Court in Delaware, lawyers from the SEC said that while creditor repayments made with stablecoins may not be technically illegal, the commission reserved the right to challenge repayments made using US-dollar pegged crypto assets.
FTX's Payment Plans
Following the exchange's collapse in November 2022, FTX explored several potential methods to make creditors whole, including a now-abandoned plan to reboot the exchange. The latest liquidation plan agreed to pay out creditor claims based on the US dollar value of asset prices at the time of FTX's bankruptcy in cash or stablecoins. The SEC noted that the current repayment plan had not yet identified a 'distribution agent'—the firm that would be responsible for distributing funds to creditors.
Crypto Experts' Reactions
The SEC's warning drew criticism from crypto analysts, such as Galaxy Digital’s head of research Alex Thorn and Coinbase chief legal officer Paul Grewal, who accused the regulator of 'overreaching' and levying unreasonable threats at FTX creditors.
The situation with FTX's creditor payments remains tense due to potential legal obstacles from the SEC, drawing criticism from some in the cryptocurrency industry.
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