🌎 FTX Bankruptcy Plan Approved: Customers to Be Repaid in Cash

FTX Bankruptcy Plan Approved: Customers to be Repaid in Cash Plus Interest

FTX’s plan to repay customers in cash plus interest has been approved by a Delaware judge, marking a significant step in the cryptocurrency exchange’s bankruptcy proceedings. The decision, made by Judge John Dorsey of the U.S. District of Delaware Bankruptcy Court, could lead to the distribution of up to $16 billion worth of recovered assets.

Details of the Repayment Plan

Two years following the collapse of FTX, 98% of creditors are set to receive 118% of their claims in cash. The plan received overwhelming support, with 94% of claimants in favor. However, Sunil Kavuri, representing the largest FTX creditor community, argued for repayments in cryptocurrency or in-kind assets. Despite this push, Judge Dorsey ruled against the idea during an October 7 bankruptcy hearing, citing the negligible value of FTX’s exchange token (FTT) and the lack of potential for price growth.

FTX Collapse and Legal Proceedings

The collapse of FTX, once one of the largest centralized crypto exchanges, has been a significant event in the cryptocurrency world. Documents revealed that Sam Bankman-Fried’s company misappropriated customer funds and falsified financial statements, leading to fraud allegations from users and U.S. authorities.

Bankman-Fried and other FTX leaders were quickly apprehended after the firm filed for Chapter 11 bankruptcy protection. Following a brief trial and multiple witness testimonies, Bankman-Fried was found guilty and sentenced to 25 years in prison. He is currently attempting to appeal the ruling, claiming judicial bias from Federal Judge Lewis A. Kaplan. Meanwhile, other former top executives like Caroline Ellison, Nishad Singh, and Gary Wang reached plea deals with federal prosecutors for reduced sentences. Ellison received a two-year jail term late last month.

Recovery Efforts by Bankruptcy CEO

John J. Ray III, the bankruptcy CEO, has been instrumental in recovering billions of dollars for the estate. Ray noted that the remains of Bankman-Fried’s empire lacked standard corporate controls and systems. Although there was a discussion last June about rebooting FTX’s exchange, the idea was ultimately abandoned due to a lack of investor interest.