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The company will pay customers with approved claims approximately 119pc of what they were owed when FTX filed for bankruptcy in 2022.
Failed cryptocurrency exchange FTX can pay back former customers with up to $16.5bn recovered from assets in a court-approved bankruptcy plan.
The plan was approved by US bankruptcy judge John Dorsey at a court hearing in Delaware yesterday (7 October), who said that FTX made for a “model case for how to deal with a very complex Chapter 11 bankruptcy proceeding”.
The company will pay 98pc of its creditors 119pc of the amount they claimed when FTX filed for bankruptcy protection in 2022. Customers will receive the payment within 60 days of the plan’s effective date – though the date has yet to be announced.
The approved settlement allows FTX to pay customers first, before paying claims filed by regulatory bodies.
In a statement released yesterday, FTX said that it estimates it has between $14.7b and $16.5b in total in property converted into cash available for distribution.
“Looking ahead, we are poised to return 100pc of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history,” said John J Ray III, the CEO and chief restructuring officer at FTX who took over in 2022 when the company filed for bankruptcy.
“The estate is working to finalise arrangements to make distributions to creditors across more than 200 jurisdictions around the world,” Ray said, adding that yesterday’s news reflects the “strong collaboration” FTX has with agencies that share its goal of “mitigating the wrongdoings of the FTX insiders”.
FTX’s downfall, touted as one of the biggest cases of financial fraud, was rapid, after it was found that the crypto company’s founder Sam-Bankman-Fried stole and funnelled $8bn of customer money into his research hedge fund Alameda.
As a result, FTX collapsed and equity investors lost $1.7bn and lenders to Bankman-Fried’s research hedge fund, Alameda, lost $1.3bn.
Bankman-Fried, who was arrested in December 2022, received 25 years in prison while former FTX executive and Bankman Fried’s ex-partner Caroline Ellison was sentenced to two years in prison for fraud and conspiracy.
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