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FTX to Offer 118% Cash Back in Reimbursement Plan for Victims, Exceeding Initial Losses
- Thanks to the strong performance of the crypto market, as well as holdings in prominent AI companies, FTX has liquidated approximately US$16B worth of assets.
- This is more than enough money to pay back the US$11M owed to creditors after the exchange’s November 2022 collapse.
- However, investors are set to be paid in cash value at the time of the loss.
- Bitcoin is up 200% since November 2022, causing a stir among the community with FTX’s branding already forever-harmed.
The dust is still settling from the collapse of FTX – at the time one of the world’s biggest exchanges – in November 2022.
Disgraced founder Sam Bankman-Fried is officially behind bars and the bankruptcy process is in full swing. As the crypto market, particularly in the regulatory space, is finally finding its feet, there’s one more piece of good news to come out of FTX’s calamitous failure:
Victims are set to be paid back in full. Well… kind of…
Related: Analysts Warn: High Risks and Persisting Bearish Views Shadow Market’s Tentative Recovery
Repayment Plan Awaiting Approval, Not All Roses for Creditors
FTX has finalised selling off its assets as part of the company’s liquidation process. The sale raked in approximately US$16.3B (AU$24.6B) worth of cash, more than enough to cover the US$11B (AU$16.7B) owed to the exchange’s victims.
John J. Ray, FTX’s appointed CEO for the current bankruptcy action, was pleased the company could at least somewhat right its wrongs.
We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
John J. Ray III, FTX CEO Filing for bankruptcy and repaying investors/customers is never a simple process. Although FTX has the money to compensate victims, the nuts and bolts of its mechanisms are yet to be fleshed out, which will likely happen in court. This will determine who receives money first, how it is to be distributed, and whether interest should be paid.
Interestingly, one of the key reasons for FTX’s spike in asset value was thanks to the crypto market’s renaissance over the past six months. This leaves a bit of a bad taste in the mouth, as FTX’s mismanagement was a key reason for the market spiralling in the first place.
Controversially, it appears unlikely victims will be reaping the same benefits from cryptocurrency’s recent surge. It has been posited that FTX will repay customers based on their cash value at the time of the collapse – when BTC was about 1/3rd of the value it is now.
But if there’s anything we’ve learned from the FTX debacle to date, it’s that there are probably a few more twists and turns in the narrative just around the corner.
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Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
