The U.S. Securities and Exchange Commission (SEC) has raised concerns regarding FTX’s proposed bankruptcy restructuring plan, despite receiving significant support from creditors.
The SEC may raise objections to the ratification of the proposal unless certain adjustments are implemented, which represents a substantial obstacle for the ailing cryptocurrency exchange.
Additionally, the SEC has demanded the removal of the discharge provision and offered additional modifications to the plan and the proposed confirmation order. In the absence of these revisions, the agency retains the prerogative to contest the plan’s confirmation.
Andrew R. Vara, the U.S. Trustee handling the FTX bankruptcy case, has expressed reservations about this viewpoint. He believes that the plan offers disproportionate legal protections to the estate’s administrators and advisers, which goes beyond what is usually allowed by current statutes.
The SEC’s concerns also encompass the handling of cryptocurrency assets under the FTX restructuring plan. The commission retains the authority to contest the liquidation or allocation of crypto to creditors, thereby raising the issue of whether these transactions adhere to federal securities regulations.
Members of the cryptocurrency community have expressed their dissatisfaction with the activities of the SEC, perceiving the agency’s concerns over the FTX restructuring plan as just another instance of “legal posturing” and unwarranted obstruction.
Scott Johnson, a finance lawyer, remarked on the SEC’s new filing, highlighting that the commission’s position on the allocation of FTX’s assets in the form of USD stablecoins demonstrates their continued opposition to the cryptocurrency business.
