Key Points
- US Bankruptcy Judge John Dorsey has greenlit FTX’s plan to repay customers up to $16.5 billion in recovered assets, with payments to begin within 60 days of the plan’s implementation.
- The approved plan prioritizes FTX customers, allowing them to receive reimbursements before competing claims from government regulators, with most customers expected to recover 119% of their account value as of November 2022.
FTX Bankruptcy Plan Gets Court Approval
In a significant development for the cryptocurrency industry, defunct crypto exchange FTX has received court approval for its bankruptcy plan. The decision, made by US Bankruptcy Judge John Dorsey in Wilmington, Delaware, on October 7, 2024, paves the way for the company to repay customers using up to $16.5 billion in recovered assets.
The approved plan is the result of extensive negotiations and settlements with creditors from over 200 jurisdictions, including FTX customers, US government agencies, and international liquidators. This comprehensive agreement prioritizes the reimbursement of FTX customers, allowing them to receive payments ahead of competing claims from government regulators.
Reimbursement Details and Timeline
According to the company’s statement, an estimated 98% of FTX’s customers will receive nearly 119% of their account value as of November 2022. This impressive recovery rate is made possible by the successful retrieval of assets lost during the company’s collapse.
The repayment process is set to begin within 60 days after the plan comes into effect. Alex Thorn, head of research at Galaxy, provided additional insight into the distribution timeline, stating that approximately $1.1 billion will be distributed this year to creditors with claims below $50,000. The remainder of the payments is expected to be made between the first and second quarters of 2025.
FTX CEO John J. Ray III hailed the court’s approval as a significant milestone, crediting the achievement to the tireless efforts of the professional team supporting the case. Ray emphasized that the team had “recovered billions of dollars by rebuilding FTX’s books from the ground up and marshaling assets from around the globe.”
Cash Repayments and Asset Recovery
It’s worth noting that all repayments will be made in cash, as FTX stated that returning the original cryptocurrency assets was not feasible due to their misappropriation by the exchange’s founder, Sam Bankman-Fried (SBF). The total value of recovered assets could reach up to $16.5 billion, although this figure may decrease to $14.7 billion after cash conversion.
The bankruptcy claim amounts will be returned with interest, except for non-governmental creditors. FTX has also raised additional funds through asset sales, including stakes in technology firms like the AI startup Anthropic.
This court approval marks a crucial step towards resolving one of the most significant collapses in the cryptocurrency industry, potentially restoring faith in the sector and providing much-needed relief to millions of affected customers and investors.
