South Korean exchange Youbit filed bankruptcy last week but has now come up with additional options to pay back its members. The exchange is asking them to vote between three options.
Youbit’s Bankruptcy Filing
Youbit exchange’s operator Yaffian filed bankruptcy on December 19 after the platform was hacked, as previously reported by news.Bitcoin.com.
A notice on the exchange’s website explains that each member will be allowed to withdraw “approximately 75% of the balance at 4:00 am on December 19.” The exchange added that “The rest of the unpaid portion will be paid after the final settlement is completed.” However, “cash and coins deposited after 4:00 pm will be 100% refunded.”
The news of Youbit’s bankruptcy sent shockwaves through the Korean crypto markets, prompting the government to step up its regulatory measures to prevent similar problems from occurring in the future. Following a meeting on December 20 to discuss cryptocurrency regulation, the regulators announced:
The bankruptcy of the virtual currency exchange Youbit following the recent hack is expected to cause financial losses for users. It is necessary to pay special attention to the risk of virtual currency speculation and to be vigilant about virtual currency trading participation.
Then on December 27, Youbit offered its creditors additional ways to be paid back and asked them to vote between three options. The voting period ends on December 31.
Options 1 and 2
The first option is to proceed with the bankruptcy filing. Citing that this option is expected to take between 1 and 3 years, Youbit described:
All assets of the company will be frozen as it is, and the court will appoint a bankruptcy trustee to handle the actual bankruptcy proceedings.
The second option is restructuring/rehabilitation, which the company can apply for in court. Should the court decide after an audit that creditors can better recoup their assets if the company continues to operate rather than go bankrupt, the rehabilitation process will ensue, Youbit explained.
In this case, creditors will be paid with the revenue generated by Youbit over time. The company estimates that this process may take three to ten years, adding that:
The withdrawal of your assets will be suspended for more than one year as the rehabilitation process proceeds.
Most Popular Option – Acquisition
The third option offered by the company is “merger and acquisition,” which involves “a plan to hand over ‘Yaffian’ to another company.” Youbit claims that it “is currently generating a significant amount of revenue,” therefore it can be acquired by “a company that is considering a new virtual currency exchange.”
After the acquisition, the exchange will be run by new executives, Youbit noted, adding:
The plan will be made so that the members’ principal will be compensated as much as possible, but it will be treated as a dividend payment plan for a certain period. It is expected that the withdrawal and transaction service will be reopened soon after the acquisition is confirmed.
On December 29, Youbit announced that about 97% of its members have so far voted for this option. Once the voting period has ended, and if this option is chosen, the company and its legal team will start discussing how to proceed in early January.
Which option do you think is best for Youbit’s creditors? Let us know in the comments section below.
Images courtesy of Shutterstock and Youbit.
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