Disbanded cryptocurrency exchange FTX has reportedly acquired the approval of the court for its $16.5 billion bankruptcy plan to give back the funds to its customers who were defrauded when the company went downhill. These payments will be done in cash, including interest, and are alleged to start within 60 days after the plan begins.
What Does the Plan Entail?
On October 7, Reuters recorded that U.S. Bankruptcy Judge John Dorsey approved FTX’s bankruptcy plan. The plan comprises creditors from more than 200 jurisdictions, settlements done between FTX customers, U.S. government agencies, and cross-border liquidators.
Authorities have alleged that the downfall of FTX affected almost 9 million customers and investors, causing massive financial downturns. The company’s bankruptcy plan is expected to offset these losses with the redistribution of almost $16.5 billion in redeemed assets.
According to a statement issued by the company, 98% of FTX’s customers will get approximately 119% of their account value as it was in November 2022. Alex Thorn, head of research at Galaxy, reassured that $1.1 billion will be given out this year to creditors whose claims are lower than $50,000. The remnants will be distributed within the first and second quarters of 2025.
John J. Ray III, FTX’s present CEO, admitted the importance of the court’s approval of the bankruptcy plan. In a public statement, Ray stated:
“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.”
Payments with Interest
The entire amount of recovered assets is alleged to be up to $16.5 billion. However, after changing these assets into cash, the figure may be near $14.7 billion. More funds were acquired by selling assets like stakes in technology companies like the AI startup Anthropic.
A major aspect of FTX’s bankruptcy plan is that all the claims will be paid back with interest to the creditors except for the claims made by non-governmental creditors. Returning the amount with interest is poised to reflect responsibly on FTX’s part as this augmented amount might bring justice to the financial losses faced by customers when the company collapsed.
It is important to observe that all repayments will be made in cash. FTX signaled that it was not practical to pay back the original crypto holdings, as those assets have been displaced by the company’s founder, Sam Bankman-Fried (SBF).
Conclusion
The court’s approval of FTX’s bankruptcy plan is a major milestone in the company’s struggle to pay back its affected customers. By bringing back billions of dollars in lost assets and starting a delineated repayment plan, the aim is to bring a solution for the people who were negatively impacted by the exchange’s collapse.
To conclude, FTX’s $16.5 billion bankruptcy plan, green-lighted by the court, is a meticulously formulated response to the far-reaching financial destruction brought by the company’s downfall. As the paybacks are set to start within 60 days, both customers and creditors have seen a glimmer of hope for a remedy of their losses and expect a fraction of their losses to be recovered with these repayments, at least. This bankruptcy plan reflects an important step toward offsetting the losses incurred to millions of customers and ending a catastrophic chapter in the history of crypto trading with a sense of responsibility and damage control. Learn more about the crypto collapses in the industry and the steps taken for recoveries with TurkishNYRadio.
