• FTX received court approval of its bankruptcy plan, allowing it to fully repay customers using $16 billion in recovered assets
• The plan will pay FTX’s customers at least 118% of the value in their accounts as of November 2022
• Founder Sam Bankman-Fried was sentenced to 25 years in prison for defrauding FTX customers and has appealed his conviction
FTX received court approval of its liquidation plan this week, allowing the collapsed cryptocurrency exchange to fully repay customers using assets recovered since its downfall. The approval is a major milestone in FTX’s chaotic bankruptcy case.
Background on FTX’s Collapse
Once one of the world’s largest crypto exchanges, FTX filed for bankruptcy in November 2022 after a liquidity crisis caused its downfall. An estimated 9 million customers and investors faced billions in losses. FTX founder Sam Bankman-Fried was later charged with fraud and sentenced to 25 years in prison. He has appealed his conviction.
Details of the Approved Liquidation Plan
Under the approved plan, FTX will pay its customers at least $1.18 for every $1 they had in their accounts in November 2022. This will be possible due to FTX’s recovery of missing assets and funds raised through selling off investments. Some customers objected to the plan, wanting higher repayments to reflect crypto’s rebound since 2022. However, FTX said this was not possible as customers’ original assets were gone.
The plan includes settlements with creditors, regulators, and FTX’s international liquidators. These settlements allow FTX to prioritize repaying customers before other claims. Regulators had filed competing claims to recovered assets.
Conclusion
The court approval represents a major victory for FTX customers, made possible by FTX’s ability to recover substantial assets after its chaotic collapse. While customers would have preferred to get their original crypto holdings back, most will at least recover a significant portion of their account value.
