FTX, the cryptocurrency exchange that filed for bankruptcy in November 2022, has announced that nearly all of its customers will receive their owed money back. This comes less than two years after the exchange’s catastrophic collapse.
FTX’s court filing reveals that it owes about $11.2 billion to its creditors. However, the exchange estimates that it has between $14.5 billion and $16.3 billion to distribute to them. This means that after paying claims in full, the plan provides for supplemental interest payments to creditors if funds still remain. The interest rate for most creditors is set at 9%.
Customers and creditors that claim $50,000 or less will receive about 118% of their claim. This covers approximately 98% of customers. The recovery of funds was made possible by monetizing a collection of assets that mostly consisted of proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.
FTX was once the third-largest cryptocurrency exchange in the world. Its collapse was akin to a bank run in the crypto world. The exchange’s founder and CEO, Sam Bankman-Fried, resigned when the exchange collapsed. In March, he was sentenced to 25 years in prison for the massive fraud that occurred at FTX.
The company appointed John Ray III, a long-time bankruptcy litigator known for cleaning up the mess after the collapse of Enron, as its new CEO. Ray expressed satisfaction with the proposed Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
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