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Collapsed crypto exchange FTX has received approval for its bankruptcy liquidation plan, that will allow it to repay its customers approximately $16 billion in recovered assets. The decision was made by U.S. Bankruptcy Judge John Dorsey during a hearing in Wilmington, Delaware, on October 7, 2024, and is also great news for millions of customers who were left unable to access their funds after the exchange"s collapse in November 2022.
Around 98% of the customers, those who had accounts with $50,000 or less, are expected to receive their repayments within 60 days after the plan. The funds were made available as part of cash, cryptocurrency, and other asset recovery that FTX owned during the bankruptcy proceedings. FTX says that it has somewhere between $14.7 billion and $16.5 billion using which it plans to repay its customers, which is at least 118% of the value in their accounts as of November 2022.
FTX said that the result was a "victory for creditors" that was made possible by its ability to recover cash and crypto assets, which it had said, were gone "missing". However, many customers have expressed disappointment too. Customers say that FTX"s collapse occurred during a robust recovery in crypto prices since 2022. Bitcoin"s price has surged from around $16,000 at the time of FTX"s bankruptcy to over $63,000 recently. Customers argue that the repayment structure doesn"t really reflect the current market values and they shall get higher repayments.
However, FTX has then clarified that it cannot just return the original crypto assets deposited by customers because those assets were mishandled by former CEO Sam Bankman-Fried. Bankman-Fried was then sentenced to 25 years in prison for the fraud.
Judge Dorsey praised FTX"s restructuring efforts as a "model case" for handling complex Chapter 11 bankruptcy proceedings. John J. Ray III, CEO and Chief Restructuring Officer of FTX, said that it was all possible by people who managed to recover billions by meticulously reconstructing FTX’s financial records and marshaling assets globally. These recovery efforts also included selling off other assets including investments in AI startup Anthropic.
There"s no exact timeline announced for when the customer repayments will begin, as FTX is still determining the logistics of ensuring that the repayments occur accurately and fairly across more than 200 jurisdictions worldwide.
Via Reuters