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FTX Gains Court Approval for $16 Billion Bankruptcy Plan, Set to Repay Customers
- A US bankruptcy court has approved FTX’s plan to repay customers approximately US$16B in cash and interest.
- FTX’s repayment strategy will return at least 118% of customers’ account balances from November 2022, with 98% of creditors set to receive the payments and 94% expressing support for the plan.
- While some customers are disappointed that they won’t benefit from recent crypto market gains, the repayment plan marks a step toward addressing the financial losses caused by FTX’s collapse.
A US bankruptcy court has approved FTX’s repayment plan, a major step toward compensating customers affected by the firm’s collapse (and a massive setback for the crypto industry, of course).
On October 7, 2024, Judge John Dorsey gave the green light for FTX to return around US$16B (AU$23.6B) in cash and interest to its customers. This is part of FTX’s bankruptcy filing from November 2022, which revealed “significant misappropriation of customer funds”.
To call it a “misappropriation” of customer funds is an understatement, but to each its own.
FTX’s repayment strategy focuses on cash payments, providing customers with at least 118% of their account balances as of November 2022. Roughly 98% of creditors will receive these payments, and 94% have expressed support for the plan.
Some creditors, however, had pushed for repayments in cryptocurrency rather than cash, but Judge Dorsey rejected this request for an obvious reason: FTX’s token (FTT) holds little to no value today. For some reason, the token is still trading in the market and has even pumped 110.2% in the last 30 days, currently priced at US$2.63 (AU$3.89).
Since filing for bankruptcy, FTX has recovered assets through sales of various investments, helping to fund the repayment plan.
Not Enough
While they are being reimbursed, some customers aren’t particularly happy with receiving their original balances, as they won’t benefit from the cryptocurrency market’s recent rise. The repayment timeline remains uncertain, but the plan’s approval at least addresses the financial losses resulting from FTX’s collapse. So, is it a happy ending?
John J. Ray, CEO and CRO of FTX said:
Today’s achievement is only possible because of the experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX’s books from the ground up and from there marshaling assets from around the globe.
John J. Ray Ray also added the following:
It also reflects the strong collaboration we have had with governments and agencies from around the world that share our goal of mitigating the wrongdoings of the FTX insiders.
John J. Ray Related: FTX Executive Ryan Salame Sentenced to 7.5 Years in Prison and Fined $11 Million
That’s probably the best outcome for crypto right now, stating that the most optimistic scenario would be that “distressed firms” become interested in crypto again and reallocate their capital, but that might be a stretch.
Author
José Oramas
José is a journalist and translator with a keen interest in blockchain and cryptocurrencies.
