A U.S. Bankruptcy Court judge in Delaware approved the crypto exchange FTX reorganization plan on Monday. This decision allows FTX to give back about $16 billion in recovered assets to its creditors, mostly its customers, who have been left in the dark since the exchange’s dramatic fall in November 2022.
According to posts on X and various financial news outlets, the approved plan indicates that nearly all of FTX’s creditors, including its customers, will receive 118% of their claim’s value as of November 2022, when FTX initially filed for bankruptcy. This overpayment includes an interest component for non-governmental creditors, aiming to compensate for the time value of their locked assets.
This decision comes after a tumultuous period following the exchange’s failure, attributed to mismanagement and fraud allegations, which led to the arrest of its former CEO, Sam Bankman-Fried. His trial highlighted one of the most significant cases of financial misconduct in the crypto industry.
FTX’s Recovery Efforts Under John Ray III’s Leadership
Following its bankruptcy, John Ray III took over as CEO of FTX and has since been able to recover assets by selling off investments and recouping stolen funds. After the court’s decision, Ray was happy and said, “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.”
The market has had a range of reactions to this news. While creditors are glad they might get their money back, X posts show a sense of lost opportunities since cryptocurrency values have increased and recovered a lot since FTX went down. Customers will get the cash value of their cryptocurrency as it was valued in 2022. Since the crypto market has recovered, this is much less than what those assets might be worth now.
The approval of the bankruptcy plan also means that the legal procedures that have caught the attention of people around the world in the financial and cryptocurrency communities may end. This could set a standard for handling bankruptcy in the volatile cryptocurrency sector.
Based on the distribution timeline, smaller claims (under $50,000) may be settled within 60 days of the plan’s implementation. This could happen as soon as the end of October 2024, giving many people affected by the collapse a quick end.
