FTX has received court approval for its bankruptcy plan, allowing it to repay customers using up to $16.5 billion in recovered assets. US Bankruptcy Judge John Dorsey approved the wind-down plan in Wilmington, Delaware, on Monday, marking a significant step forward in resolving one of the crypto industry’s most high-profile collapses.
The approved wind-down plan is based on a series of settlements with customers, creditors, US government agencies, and international liquidators. Under this plan, FTX aims to repay 98% of its customers — those who held $50,000 or less on the exchange — within 60 days after the plan’s effective date, which is yet to be determined.
FTX estimates it will have between $14.7 billion and $16.5 billion available to repay creditors, potentially allowing customers to receive at least 118% of the value in their accounts as of November 2022. This recovery was made possible through the company’s efforts to retrieve cash and crypto assets that had disappeared during its chaotic collapse, as well as by selling off other assets, including investments in tech companies like the AI startup Anthropic.
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The plan prioritizes customer repayment over fines and tax debts owed to US government agencies, including the Commodity Futures Trading Commission and Internal Revenue Service. Additionally, a liquidator appointed in the Bahamas has agreed to cooperate with FTX after previously challenging the company’s authority to file for bankruptcy in the US
However, customer response to the plan has been mixed. Many expressed disappointment over missing out on the significant rebound in crypto prices since 2022. Some customers objected to the plan, demanding higher repayments reflecting recent increases in cryptocurrency values. For instance, bitcoin’s price has risen from $16,000 in November 2022 to over $63,000 currently.
FTX CEO John Ray emphasized that returning the exact crypto assets customers had deposited is impossible, as these assets were misappropriated by founder Sam Bankman-Fried, who was sentenced to 25 years in prison for stealing from FTX customers.
Related:
- Sam Bankman-Fried Sentenced To 25 Years For Multi-Billion FTX Fraud
- FTX’s Ryan Salame Sentenced to 7.5 Years in Prison, Ordered to Pay Over $11 Million
- Bankman-Fried’s Ex-Girlfriend Caroline Ellison Sentenced to Two Years in Prison
The company remains in talks with the US Department of Justice over $1 billion seized during Bankman-Fried’s criminal prosecution. Interestingly, FTX shareholders could potentially receive up to $230 million from these seized funds.
The judge praised FTX’s handling of the complex bankruptcy, calling it “a model case” for dealing with such intricate proceedings in the cryptocurrency industry.
Information for this story was found via Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
