The defunct cryptocurrency exchange, FTX, has gained court approval for its bankruptcy recovery plan, enabling it to repay its customers in cash along with interest, utilizing up to $16.5 billion in recovered assets, as reported by Reuters on October 7.
Overview of the Bankruptcy Plan
In a hearing in Wilmington, Delaware, US Bankruptcy Judge John Dorsey approved a plan that encompasses creditors from over 200 jurisdictions. This strategy is based on settlements reached with FTX’s customers, creditors, U.S. government agencies, and international liquidators.
Prioritization of Customer Claims
The approved plan emphasizes prioritizing FTX customers. It allows the exchange to address their claims ahead of competing demands from government regulators. Officials estimate that the FTX collapse has affected approximately 9 million customers and investors, leaving them with significant financial losses.
Details on Reimbursements
As stated by the company, an impressive 98% of FTX customers are set to receive roughly 119% of their account value as it stood in November 2022.
The reimbursement process is anticipated to initiate within 60 days following the implementation of the plan. However, those involved in Chapter 11 bankruptcy filings will separately announce the first distribution date for the assets they currently possess.
Distribution Timeline
Alex Thorn, Head of Research at Galaxy, emphasized that about $1.1 billion will be allocated to creditors with claims under $50,000 within this year. The remaining payments will occur between the first and second quarters of 2025.
FTX has commented that this outcome was achieved due to the successful recovery of assets lost during the company’s downfall.
Significance of the Approval
John J. Ray III, CEO of FTX, described the approval as a crucial milestone, highlighting the dedicated efforts of the professional team involved:
“This achievement is only possible because of the tireless work of our professional team, who have successfully recovered billions by meticulously reconstructing FTX’s financials and managing assets globally.”
Payments with Interest
While the total amount recovered could peak at $16.5 billion, it’s expected to decrease to $14.7 billion after cash conversion. Additional funds were obtained through asset sales, including shares in tech enterprises like the AI startup Anthropic.
Ray noted that all bankruptcy claimants would receive their payments with interest, excluding non-governmental creditors.
Challenges in Asset Return
It is important to note that the repayments will be in cash, as FTX stated it is not feasible to return the original cryptocurrency; these assets had been misappropriated by the exchange’s founder, Sam Bankman-Fried (SBF).
SBF has been sentenced to 25 years in prison for defrauding customers of FTX but filed an appeal on September 13, claiming that the trial involved significant misconduct.
Related Topics
This rewritten content maintains the original article’s core information, while enhancing the structure with optimized headings and subheadings.