A court petition states that nearly every client of the defunct cryptocurrency exchange FTX will receive their money back plus extra.
In a restructuring plan that was released late on Tuesday, FTX stated that it believes it owes creditors around $11.2 billion. According to the corporation, it has between $14.5 billion and $16.3 billion to give out to creditors.
According to the proposal, customers with claims of $50,000 or less will get about 118% of the whole amount of their acceptable claim. Approximately 98% of creditors will be compensated with this amount.
The restructuring proposal, which is still pending court approval, is expected to provide some respite to FTX clients whose funds have been frozen by the exchange since its November 2022 bankruptcy filing.
Sam Bankman-Fried, the well-known founder of FTX, was found guilty on seven criminal counts in early November, including one that included stealing billions of dollars from FTX’s clients. He was sentenced to 25 years in jail.
FTX was able to raise the funds through the sale of many assets, including venture investments that the exchange owned and further investments that Bankman-Fried’s cryptocurrency hedge fund, Alameda, held.
One of FTX’s most well-known investments was in the Amazon-backed artificial intelligence startup Anthropic. This year, FTX made almost $900 million from the sale of the majority of its Anthropic holding.
FTX had to look for alternative sources of funding due to a significant amount of digital assets that was missing from the exchange.
As a result, throughout the chapter 11 proceedings, the Debtors were not able to profit from the value of these missing tokens. In order to pay back creditors, the Debtors have instead had to hunt for new sources of recoverable assets, according to a press statement issued by FTX on Wednesday.
The price of cryptocurrency has increased dramatically since November 2022. Bitcoin has increased by around 270% after FTX filed for bankruptcy.
Following Bankman-Fried’s departure, FTX named John Ray III CEO. During a November 2022 speech on FTX, Ray stated that he had never witnessed “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here” in his 40 years of legal and restructuring expertise.
In the press release on Wednesday, Ray stated, “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.”
