Following the US Trustee’s objections, bankrupt crypto exchange FTX revised its settlement proposal, as per a court filing on August 20. Earlier, the US Trustee had criticized the exchange for its previous settlement motion. It led to the FTX debtors taking steps to address the US Trustee’s objections. However, they also expressed their reservations with the US Trustee’s involvement in a routine settlement process, media reports said.
The revised proposal includes the US Trustee as a noticed party and reduces the maximum settlement claim to $7 million from earlier $10 million. The Debtors have also agreed to file monthly reports about executed settlements. These measures are expected to increase transparency and oversight in the settlement process. Objections raised by the “noticed parties” will have to be settled by a court order before they can be included in the claim process.
The US Trustee’s objections were about the threshold of $10 million for a claim to be considered “small.” The FTX debtors revising their proposal indicates a willingness to take the US Trustee’s observations constructively. By revising the settlement proposal, FTX has tried to accommodate creditor interest as well as regulatory considerations.
FTX was the third largest crypto exchange until it faced financial troubles and eventually filed for chapter 11 bankruptcy protection in November 2022.
