On October 7, Reuters reported that the bankruptcy plan for the collapsed cryptocurrency exchange FTX has been approved by a court, allowing the company to utilize its existing $16.5 billion in recovered assets to repay customers.
U.S. Bankruptcy Judge John Dorsey approved the plan during a hearing in Wilmington, Delaware, which encompasses creditors from over 200 jurisdictions.
The plan relies on settlements reached with FTX customers, creditors, U.S. regulatory agencies, and international liquidators. It prioritizes repaying claims from FTX customers, while claims from government regulatory bodies will be considered afterward.
Authorities estimate that the collapse of FTX has left approximately 9 million customers and investors facing significant financial losses. According to a statement from FTX, as of November 2022, 98% of FTX customers had received compensation, amounting to nearly 119% of their total account balances.
The repayment process is expected to begin within 60 days of the plan’s approval. However, the debtors seeking bankruptcy protection will announce the date for the first distribution of their current assets separately.
Alex Thorn, head of research at Galaxy, stated that approximately $1.1 billion will be distributed this year to creditors with claims below $50,000, with the remaining funds expected to be paid between the first and second quarters of 2025.
FTX attributed this achievement to the recovery of assets lost during the company’s collapse. FTX CEO John J. Ray III described the approval of the plan as a significant milestone.
He added, “The professional team supporting this case has extensive experience and has worked tirelessly to rebuild FTX’s accounts from scratch and recover billions of dollars in assets from around the world.”
While the total recovered value could reach $16.5 billion, the amount may decrease to $14.7 billion after cash conversion. Additionally, extra funds have been raised through asset sales, including equity in tech companies like the AI startup Anthropic.
Ray III emphasized that all bankruptcy claims, excluding those from government creditors, will be repaid in full with interest. Notably, repayments will be made in cash, as FTX stated that returning the original cryptocurrency assets is not feasible due to misappropriation by the exchange’s founder, Sam Bankman-Fried.
Previously, Sam Bankman-Fried was sentenced to 25 years in prison for defrauding FTX customers. However, he filed an appeal on September 13, claiming that the trial was rife with misconduct.
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