The cryptocurrency exchange said it owes about $11.2billion to its creditors, but estimates it has between $14.5billion and $16.3billion to distribute to them
FTX, the cryptocurrency exchange that collapsed less than two years ago, has announced it will be returning money to nearly all of its customers, with some even receiving more than they are owed.
In a court filing late on Tuesday, FTX revealed it owes approximately $11.2billion to its creditors, but estimates it has between $14.5billion and $16.3billion available for distribution. The document also stated that after settling claims in full, any remaining funds would be used for supplemental interest payments to creditors at a rate of 9%.
However, this may offer little comfort to those who were trading cryptocurrency on the platform when it went under. At the time of FTX’s bankruptcy protection filing in November 2022, bitcoin was valued at $16,080.
Since then, crypto prices have skyrocketed as the economy recovered and FTX’s assets were sorted out over the past two years. On Tuesday, a single bitcoin was selling for close to $62,675, representing a 290% loss for those investors, slightly less if accrued interest is taken into account.
According to the plan filed with the US Bankruptcy Court for the District of Delaware, customers and creditors claiming $50,000 or less will receive about 118% of their claim. This covers roughly 98% of FTX customers. FTX has managed to recover funds by capitalising on a collection of assets primarily comprising proprietary investments held by Alameda or FTX Ventures businesses, or litigation claims.
The company filed for bankruptcy protection in November 2022 following a crypto equivalent of a bank run. Sam Bankman-Fried, the chief executive and founder, stepped down when the exchange collapsed.
In March, he was handed a 25-year prison sentence for the massive fraud that took place at FTX. Bankman-Fried was found guilty of fraud and conspiracy in November – a stark contrast from his previous successes, which included a Super Bowl advertisement, congressional testimony, and celebrity endorsements from stars like Tom Brady, Stephen Curry, and Larry David.
John Ray III, a seasoned bankruptcy litigator renowned for cleaning up the mess left by Enron’s collapse, was appointed as the new chief executive. “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,” Ray stated in a prepared statement.
Although FTX technically remains a company, its future is uncertain. In early 2023, Ray announced the formation of a task force to explore the possibility of reviving FTX.com, the crypto exchange. The grim details of a company gone rogue, revealed after its assets were seized, would cripple almost any business trying to make a comeback, but the rules might be different for cryptocurrency exchanges.
Binance, a rival crypto exchange, briefly considered acquiring FTX before it collapsed in late 2022. Its founder and former chief executive, Changpeng Zhao, was sentenced last week to four months in prison for turning a blind eye as criminals used the platform to launder money linked to child sex abuse, drug trafficking and terrorism.
Despite this, Binance remains the largest crypto exchange globally. A bankruptcy court hearing is scheduled for June 25 to discuss the distribution of FTX’s assets.
