The US Securities and Exchange Commission (SEC) has warned FTX exchange about its strategy for repaying creditors, suggesting a possible objection to using stablecoins or other crypto assets.
The SEC’s filing to the Delaware Bankruptcy Court highlights issues with FTX’s proposed use of stablecoins, particularly if they involve cryptocurrency assets.
The agency has reserved the right to contest their use, particularly if they involve cryptocurrency assets. The SEC has also expressed concerns over the lack of clarity regarding who will oversee the distribution of these stablecoins.
FTX filed for bankruptcy in November 2022 with an $8 billion deficit and initially planned to settle debts with cash or stablecoins. However, the SEC’s filing indicates that this repayment approach might face legal challenges.
More so, the U.S. Trustee has objected to a provision in FTX’s bankruptcy plan that would shield debtors from future legal actions by creditors. The SEC has emphasized its right to challenge transactions involving cryptocurrency assets if they are not in compliance with federal securities laws.
The regulators are keen to ensure transparency and legality in all transactions, which could impact the timeline and method of repayments.
