The defunct cryptocurrency exchange FTX is in the final stages of repaying its customers and creditors using stablecoins as initially planned. Earlier today, the address associated with the cryptocurrency exchange received 6.275 million USDT from OKX.
The move by the current FTX officials comes a few days after the United States Securities and Exchange Commission (SEC) stated that it could oppose the proposal to distribute funds in stablecoins.
The US SEC stated in a court filing last Friday that it “is not opining as to the legality, under the federal securities laws, of the transactions outlined in the Plan and reserves its rights to challenge transactions involving crypto assets.”
Regulatory Overreach
the SEC is again reserving the right to claim dollar-backed stablecoins are “crypto asset securities,” despite dropping their enforcement against paxos and losing their MTD on BUSD against binance in july
this is the height of jurisdictional overreach
it’s quite absurd if you… pic.twitter.com/laT6vY5i6T
— Alex Thorn (@intangiblecoins) September 1, 2024
The adoption of stablecoins, especially those backed by fiat currencies, has grown rapidly in the past few years. However, the US SEC has issued different opinions on stablecoins in the recent past, especially in courts of law. Moreover, despite several attempts, the US Congress has not clearly defined laws that regulate the stablecoins sector.
In July, the US SEC lost a case against Paxos, in which the regulator had classified BUSD as an unregistered security asset.
Impact of FTX Cash Distribution
#FTX News: $16b will be returned to creditors starting in Q4 2024. pic.twitter.com/oviLRkg8dU
— MartyParty (@martypartymusic) September 2, 2024
Previously, FTX agreed to a plan to repay creditors between $14.5 billion and $16.3 billion before the end of this year. The approved restructuring plan will see FTX creditors fully repaid in cash, despite the huge legal fees of over $800 million.
The distribution of FTX funds will add liquidity to the industry, as most investors are likely to buy and ride the anticipated bull market.
Meanwhile, the FTX closure gives hope to the distressed customers of WazirX in India, who were impacted by the recent $234 million hack.