HomeCryptoFTX customers may receive refunds, but not profits from cryptocurrency price surges

FTX customers may receive refunds, but not profits from cryptocurrency price surges

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FTX Customers Could Receive Full Value of Lost Money in Bankruptcy Plan, But Miss Out on Crypto Gains

Customers of the failed cryptocurrency exchange FTX may soon see some relief as the company’s bankruptcy plan could potentially return the full value of the money they lost. However, the gains on their holdings of bitcoin and other digital assets over the past two years will not be included in the reimbursement.

FTX, which is currently undergoing reorganization, announced that 98% of its creditors, including individual investors with $50,000 or less in the company, could receive their lost funds in cash within 60 days of the reorganization plan taking effect. The plan still needs approval from a court and creditors.

John J. Ray III, the CEO of FTX, expressed optimism about the proposed chapter 11 plan, which aims to return 100% of bankruptcy claim amounts plus interest to non-governmental creditors. This plan became possible due to the sale of assets held by FTX and its sister company, Alameda Research, including shares in Anthropic, an AI startup backed by Amazon.

Despite the positive news, some claimants have raised objections to their crypto assets being valued at November 2022 prices, as the value of bitcoin has surged over 250% since then. The Justice Department appointed an independent examiner to review potential issues in the bankruptcy, including past investigations into FTX debtors and potential conflicts of interest involving FTX’s law firm, Sullivan & Cromwell.

Adam Moskowitz, a lawyer representing some FTX bankruptcy claimants, expressed concerns about the process despite the generous returns promised by the company. FTX acknowledged that some claimants may find the reimbursement insufficient, as the company held a small percentage of bitcoin and Ethereum compared to what customers believed.

Former FTX chief Sam Bankman-Fried was sentenced to 25 years in prison for orchestrating the fraud that led to the exchange’s collapse. The situation remains complex, with ongoing scrutiny and challenges in the bankruptcy process.

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