FTX announced in a recent court filing that the majority of customers affected by the collapse of the cryptocurrency exchange will be reimbursed, and potentially even receive more than they initially lost.
According to the reorganization plan revealed late on Tuesday, FTX estimates it owes creditors approximately $11.2 billion. However, the available funds for distribution range between $14.5 billion and $16.3 billion.
Under the proposed plan, customers with claims totaling $50,000 or less will receive roughly 118% of their allowed claim. This compensation is expected to reach about 98% of creditors.
Although the reorganization plan is subject to approval by the bankruptcy court, it offers hope for relief to FTX customers who have had their funds locked up since the exchange filed for bankruptcy protection in November 2022.
The founder of FTX, Sam Bankman-Fried, recently received a 25-year prison sentence after being convicted of seven criminal counts, including charges related to embezzling billions from FTX’s customers.
To raise the necessary funds, FTX sold various assets, including venture investments and holdings from Alameda, Bankman-Fried’s crypto hedge fund. Notably, FTX sold a significant portion of its stake in Anthropic, an artificial intelligence firm backed by Amazon, earning nearly $900 million.
FTX faced challenges in raising funds due to a substantial amount of missing cryptocurrency from the exchange. Consequently, the exchange couldn’t benefit from the surge in crypto prices since November 2022, with Bitcoin appreciating by approximately 270% since FTX’s bankruptcy filing.
After Bankman-Fried resigned, John Ray III was appointed as CEO of FTX. Reflecting on the situation in November 2022, Ray expressed astonishment at the failure of corporate controls and the absence of reliable financial information at FTX.
In a press release, Ray expressed satisfaction with the proposed chapter 11 plan, which aims to return 100% of bankruptcy claim amounts plus interest to non-governmental creditors.
