FTX Cleared to Repay Customers Up to $16.5 Billion In Bankruptcy Case
Defunct crypto exchange FTX has gained approval for its reorganization plan, allowing it to repay exchange customers who lost access to their balance during the company's bankruptcy, according to an Oct. 7 press release.
Almost all creditors will receive about 119% of the amount of their allowed claims. FTX expects to have between $14.7 billion and $16.5 billion in cash available for distribution. Payouts will occur within 60 days of the plans effective date. The effective date and first payout dates are yet to be announced.
FTX CEO John J. Ray III said that the plan was possible because of the experience and tireless work of the team of professionals supporting [the] case" and their far-reaching asset recovery efforts, which recouped billions of dollars.
Ray added that FTXs estate is finalizing both distribution and recovery agreements globally. Creditors in over 200 jurisdictions will receive repayment.
FTX described several sources of funds, including debtors' own assets, liquidators, private parties, and the U.S. Department of Justice (DOJ). Reuters highlighted that the DOJ could give shareholders up to $230 million of the $1 billion that it seized during its prosecution of former FTX CEO Sam Bankman-Fried.
Reuters also noted that U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and Internal Revenue Service (IRS), have allowed FTX to focus on customer repayment before paying fines and tax debts.
Some Demand Higher Payouts
Despite the plan's approval, some creditors have called for higher payouts because they could not access their exchange balance during a stronger crypto market.
Reuters cited David Adler, an attorney representing four objecting creditors. Adler noted that Bitcoin (BTC) was worth $16,000 at the time of FTXs November 2022 bankruptcy but is now priced at $63,000. The objecting creditors do not believe that the expected payout truly represents a 100% recovery.
FTX has stated that the crypto originally deposited by customers is no longer available due to Bankman-Fried's mishandling of the funds.
During its collapse, FTX held just 0.1% of customers Bitcoin deposits. Steve Coverick, an FTX financial adviser, said during the latest proceedings that purchasing crypto to repay customers would be extremely expensive.
Outside of the bankruptcy case, FTX's former leaders have been the subject of criminal proceedings. Bankman-Fried was convicted in November 2023 and sentenced to 25 years in prison in March. Caroline Ellison, who formerly served as CEO of FTXs sister company, Alameda Research, reached a plea deal in 2022 and was sentenced to 2 years in prison this October.
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Text source: Bitrates.com Feed
