FTX Customers to Receive Full Compensation and More, Court Filing Reveals
FTX Customers to Receive More Than Expected in Bankruptcy Case
In a surprising turn of events, customers of the collapsed cryptocurrency exchange FTX are set to receive more than they initially expected in the ongoing bankruptcy case. According to a recent court filing, almost all customers will be reimbursed for their losses — and then some.
FTX estimates that it owes creditors approximately $11.2 billion, but the company has between $14.5 billion and $16.3 billion available to distribute to creditors. Customers whose claims amount to $50,000 or less will receive approximately 118% of their allowed claim, with around 98% of creditors expected to receive this compensation.
The reorganization plan, which still needs approval from the bankruptcy court, is a welcome relief for FTX customers who have had their funds locked up since the exchange filed for bankruptcy protection in November 2022.
The high-profile founder of FTX, Sam Bankman-Fried, was convicted of seven criminal counts earlier this year, including charges related to stealing billions of dollars from customers. He received a 25-year prison sentence. Despite this setback, FTX managed to raise the necessary funds by selling off assets, including venture investments and holdings from Bankman-Fried’s crypto hedge fund.
One of FTX’s notable investments was in artificial intelligence firm Anthropic, backed by Amazon. By selling off most of its stake in Anthropic, FTX earned nearly $900 million to repay creditors.
FTX had to explore alternative avenues to raise funds due to a significant amount of missing cryptocurrency from the exchange. The company stated that it was unable to benefit from the appreciation of these missing tokens during the bankruptcy proceedings, prompting the need to seek other sources of recoverable value.
With cryptocurrency prices soaring since FTX’s bankruptcy filing, the timing of the reorganization plan couldn’t be better for creditors. Bitcoin, for example, has surged by around 270% since the exchange’s collapse.
Following Bankman-Fried’s departure, FTX appointed John Ray III as CEO, who expressed optimism about the proposed chapter 11 plan. Ray highlighted the unprecedented failure of corporate controls and financial mismanagement at FTX, emphasizing the importance of returning 100% of bankruptcy claim amounts plus interest to non-governmental creditors.
Overall, the news of FTX customers receiving more than expected in the bankruptcy case marks a significant development in the ongoing saga of the cryptocurrency exchange’s downfall.
— CNBC’s MacKenzie Sigalos contributed to this report.
