- FTX filed for bankruptcy in 2022 after financial irregularities and liquidity issues, leaving customers wondering if they’d get their money back.
- FTX’s legal team says full repayment of verified claims may be possible by selling remaining assets and using the proceeds.
- While uncertainties remain, FTX’s lawyer said they have an objective of repaying customers 100%, giving creditors hope despite the complex bankruptcy process.
The crypto exchange FTX filed for bankruptcy in late 2022, leaving customers and creditors wondering if they would ever see their money again. However, FTX’s legal team says full repayment may be possible for verified claims.
The Bankruptcy Filing
FTX, once one of the largest crypto exchanges, filed for Chapter 11 bankruptcy protection on November 11, 2022. This followed the revelation of financial irregularities and a liquidity crunch at FTX and its sister hedge fund, Alameda Research. FTX founder Sam Bankman-Fried resigned as CEO during the crisis.
Since the filing, FTX has been managed by restructuring experts. Their goal is to stabilize operations, recover assets, and develop a plan to repay creditors. This process has involved locating cryptocurrency reserves, selling assets, and consolidating FTX’s global network of over 100 affiliated companies.
The Possibility of Full Repayment
At a January 31 bankruptcy hearing, FTX lawyer Andrew Dietderich said customers and creditors could potentially get 100% of their money back. However, he cautioned that full repayment is an “objective” requiring much work, not a guarantee.
To repay customers, FTX must first verify each claim. Millions of claims have been filed, some of which may not be valid. Once claims are validated, the size of each will be set based on account balances on the bankruptcy filing date. FTX recently gained court approval to begin this claims review process.
Dietderich explained that restarting the FTX exchange would have been too costly and risky. Instead, FTX is focused on selling remaining assets and using the proceeds to pay creditors. By late 2022, FTX had accumulated $4.4 billion in cash reserves, up from $2.3 billion in October.
While uncertainties remain, Dietderich’s statement gave creditors hope that FTX has a path to make them financially whole. For now, all involved must wait as the complex bankruptcy process moves forward.