By Creditors of the defunct cryptocurrency exchange FTX are set to recover up to $16.5 billion (£12.6 billion) following the approval of a bankruptcy plan by a US court on Monday.
This resolution marks the end of a turbulent chapter that began in November 2022 when FTX filed for bankruptcy, leaving millions of global users locked out of their accounts.
FTX, once one of the largest crypto exchanges, became embroiled in scandal after its founder and former CEO, Sam Bankman-Fried, was found guilty of misappropriating customer funds, leading to the platform’s demise.
Bankman-Fried is currently serving a 25-year prison sentence for his role in the collapse.
A historic payout for customers
Under the approved agreement, former FTX customers are expected to receive a return of approximately 119% of their holdings at the time of the bankruptcy filing, according to the company.
This repayment is expected to take place 60 days after the plan’s activation, though the exact date for the disbursement remains undecided.
John J Ray III, FTX’s current CEO and the attorney overseeing the company’s liquidation, hailed the court’s approval of the bankruptcy plan as a “significant milestone” in efforts to compensate customers and creditors across more than 200 jurisdictions.
Ray said in a statement:
Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.
Recovery efforts yield billions
When FTX collapsed in late 2022, it was revealed that around $8 billion in customer funds were unaccounted for, not including outstanding debts owed to investors and other stakeholders.
Since then, Ray’s team has worked diligently to recover as much of FTX’s assets as possible, securing between $14.7 billion and $16.5 billion through various asset sales.
One significant recovery came from the sale of FTX’s investment in artificial intelligence firm Anthropic.
The approved settlement prioritizes customer repayments over other unsecured creditors, including government claims.
However, not all former customers are satisfied with the deal, as some have pointed out that receiving compensation in cash does not offset the value they would have gained had their crypto holdings remained intact.
Since the exchange’s collapse, Bitcoin’s value has more than tripled, exacerbating the frustration of those whose digital assets were lost.
While the settlement offers a significant recovery for FTX’s customers, it also highlights the complex and unprecedented nature of this bankruptcy case.
As the cryptocurrency sector continues to evolve, the FTX saga will likely serve as a cautionary tale for both investors and regulators alike.
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