FTX Bankruptcy: Refunds Expected for Most Customers, Excludes Crypto Gains
By Leira Aquino
May 09, 2024 06:19 AM EDT
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May 09, 2024 06:19 AM EDT
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FTX, the cryptocurrency exchange that filed for bankruptcy protection in November 2022, has recently announced a plan to return funds to its customers, excluding gains from cryptocurrency investments.
A court filing made late Tuesday says FTX owes approximately $11.2 billion to its creditors, with an estimated $14.5 billion to $16.3 billion available for distribution, NPR reported.
The plan, subject to court approval, outlines that nearly all customers will receive the money owed to them, with some receiving more than their initial claims.
Specifically, customers and creditors with claims of $50,000 or less are expected to receive about 118% of their claim in cash within 60 days of the plan's implementation, according to the press release.
This covers approximately 98% of FTX customers.
While the plan offers relief to affected customers, it does not account for gains from cryptocurrency investments made during the two-year period since FTX's collapse.
As cryptocurrency prices surged during the economic recovery, customers who held assets with FTX missed out on substantial gains.
FTX acknowledges the limitation, stating that customers will not benefit from the appreciation of crypto assets held by the exchange during the bankruptcy proceedings.
The company attributes this to its inability to recover missing tokens, which constituted a small fraction of the overall cryptocurrency market.
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Despite the proposed plan, challenges remain, including concerns raised by some claimants and ongoing scrutiny from regulatory authorities.
The appointment of an independent examiner by the Justice Department to review potential conflicts of interest underscores the complexity of the bankruptcy proceedings.
FTX's leadership, under CEO and Chief Restructuring Officer John J. Ray III, remains optimistic about the proposed plan's ability to provide relief to creditors.
Ray expressed gratitude to customers and creditors for their patience throughout the process and emphasized the company's commitment to returning funds to non-governmental creditors in full, plus interest.
The bankruptcy court is set to hold a hearing on the dispersion of FTX assets on June 25.
READ MORE: 'Remorseless' FTX Founder Sam Bankman-Fried Sentenced to 25 Years for $8 Billion Fraud
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