FTX Creditors Set to Receive $16.5bn in Bankruptcy Plan Approval
In a groundbreaking development, creditors of the collapsed cryptocurrency exchange FTX are set to receive up to $16.5bn under a bankruptcy plan approved in the US on Monday. This agreement marks the end of a tumultuous saga that began when the firm went bankrupt in November 2022, leaving millions of customers worldwide without access to their accounts.
Former FTX boss Sam Bankman-Fried was convicted of stealing customer funds prior to the collapse and was subsequently sentenced to 25 years in prison. The approved plan will enable former customers to recover approximately 119% of the funds they had in their accounts at the time of bankruptcy, according to FTX.
John J Ray III, the lawyer overseeing FTX’s bankruptcy process and current chief executive, described the approval of the plan as a “significant milestone” in the firm’s efforts to repay funds to individuals and businesses in over 200 jurisdictions globally. He stated, “Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.”
Following FTX’s bankruptcy declaration in late 2022, approximately $8bn in customer funds were reported missing, excluding debts to investors and others. Ray’s team has since recovered assets valued at $14.7-$16.5bn, partly through the sale of FTX’s remaining assets, including its stake in the artificial intelligence firm Anthropic.
The agreement with the bankruptcy court allows the firm to prioritize repaying customers ahead of other unsecured creditors, such as the government. However, the repayment in cash has received a mixed reception from some former customers, who argue that the value of their lost crypto holdings would be significantly higher today due to the surge in bitcoin prices since November 2022.
As the cryptocurrency market continues to evolve, the resolution of FTX’s bankruptcy case serves as a crucial milestone in the industry’s ongoing efforts to address issues of security, transparency, and accountability.
