top of page
  • Capital Culture

FTX Says Most Customers Of The Bankrupt Crypto Exchange Will Be Made Whole And Receive All Of Their Money Back

Sam Bankman-Fried. Credit: Lam Yik/Bloomberg

As reported by CNBC, a court filing has revealed that customers of failed cryptocurrency exchange FTX are set to recover their funds and then some. According to a reorganization plan published on May 7th, FTX estimates that it owes its creditors $11.2bn and has between $14.5bn and $16.3bn to distribute to them.

The plan states that 98% of creditors will receive approximately 118% of their claims, with those whose claims amount to $50,000 or less being compensated. This will come as a relief to FTX customers, who have been unable to access their money since the exchange filed for bankruptcy protection in November 2022.

The exchange's founder, Sam Bankman-Fried, was convicted of seven criminal charges, including theft of billions of dollars from FTX clients, in early November 2022, and was sentenced to 25 years in prison. To raise the necessary funds to repay creditors, FTX sold a number of assets, including venture investments held by the exchange and other investments held by Alameda, Bankman-Fried’s crypto hedge fund. The exchange also sold most of its stake in artificial intelligence firm Anthropic, which was backed by Amazon, earning nearly $900m.

FTX had to figure out alternative methods to raise money because it has a large sum of cryptocurrency missing from the exchange. In a press release on May 8th, FTX stated that “the Debtors have not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases. Instead, the Debtors have had to look to other sources of recoverable value to repay creditors,”. Since FTX’s bankruptcy filing, crypto prices have appreciated dramatically, with Bitcoin up around 270%.

After Bankman-Fried stepped down, FTX assigned John Ray III as CEO. When discussing FTX in November 2022, Ray remarked that he had “never seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” in his 40 years of legal and restructuring experience. 

“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,” Ray stated in the press release. 

The reorganization plan still requires approval from the bankruptcy court.

1 view0 comments


bottom of page