FTX, the now-defunct cryptocurrency exchange, is set to distribute up to $16 billion to its customers following a court hearing that confirmed its restructuring plan.
Repayments will be based on the price of Bitcoin at the time of bankruptcy filing, below $18,000. The lower price will disappoint some, but it is better than nothing.
US Bankruptcy Judge John Dorsey sanctioned the plan during a session in Wilmington, Delaware. Reimbursements are expected to start within 60 days following the court approval, with customer claims being priorities.
FTX Closer to Repayment
Most people who lost money with FTX will get their money back, plus some interest, by the end of 2024 after waiting two years post-FTX’s collapse. According to the bankruptcy plan, 98% of creditors will receive around 119% of their approved claims within 60 days after the plan officially starts.
John J. Ray III, who led the company’s restructuring efforts, said FTX had recovered between $14.7 billion to $16.5 billion, and the estate will use the funds for customer repayments.
The recovered funds include assets from various sources, like assets controlled by FTX and assets recovered by government agencies and liquidators in different locations.
The plan approval is a major milestone in the FTX bankruptcy resolution. Ray III said it would be the biggest and most complex bankruptcy asset distribution ever.
FTX CEO said the FTX estate is teaming up with specialized agents to ensure that the funds will be safely distributed to creditors across over 200 jurisdictions. The exact date the plan takes effect and the first distribution date have not yet been announced. They will be communicated by FTX later.
“The estate is working to finalize arrangements to make distributions to creditors across more than 200 jurisdictions around the world. In preparation for this process, we are finalizing agreements to retain specialized agents to assist us in getting recoveries to customers around the world as safely and expeditiously as possible,” he said.
With the court’s approval, the FTX bankruptcy saga is nearing its conclusion. Once implemented, the reorganization plan will allow for substantial repayments to creditors and customers who were affected by the exchange’s collapse.
Still, it’s not a complete end to one of America’s biggest frauds, as legal proceedings against former executives are still ongoing.
SBF Still in Prison
Sam Bankman-Fried, the founder and former CEO of FTX, was sentenced to 25 years in prison after being convicted on multiple counts of fraud and conspiracy. He was also ordered to forfeit $11 billion. However, Bankman-Fried is currently appealing his conviction, claiming bias from the presiding judge during his trial.
Bankman-Fried’s closest ally, Alameda Research’s former CEO Caroline Ellison, received a two-year prison sentence and was mandated to forfeit $11 billion in September. Her sentencing is considered a lighter sentence compared to the maximum statutory penalty she faced due to her cooperation with prosecutors.
Ryan Salame, the former CEO of FTX Bahamas, was sentenced to seven and a half years in prison after pleading guilty to charges related to illegal political contributions.
Other FTX insiders, including Nishad Singh and Gary Wang, are scheduled for sentencing in late October and November this year. Both pleaded guilty to multiple charges and are expected to receive a sentence for the parts they played in the FTX fraud.
FTT Skyrockets After Court Approval
Judge Dorsey stated during the court’s session that FTX’s native token, FTT, has “zero value.” Following the court’s approval of FTX’s bankruptcy plan, FTT experienced a major price surge, skyrocketing over 50% to around $3.23 before retreating below $3.
According to CoinGecko, FTT has soared around 119% in the last 30 days ahead of the court hearing. The increase could be driven by optimism surrounding the repayment plan for creditors.
Source: https://blockonomi.com/bankruptcy-judge-greenlights-ftxs-16-billion-customer-repayment-plan/