Cryptocurrency exchange FTX, which went bankrupt in November 2022announced that nearly all of its customers could get what they lost in cash, and then some, under a newly proposed plan.
According to late Tuesday entries filed by FTX in U.S. Bankruptcy Court for the District of Delaware, FTX will have between $14.5 billion and $16.3 billion in cash after it sells all of its assets — more than enough to cover the $11.2 billion that was owed to non-governmental creditors.
The majority (98%) of FTX's creditors are customers with claims of $50,000 or less.
If the court approves the proposed plan, this group of two million people will receive 118% of the allowed claims in cash within 60 days.
The percentage is “100% of the bankruptcy claim amounts plus interest,” according to FTX CEO John Ray, who took over after FTX collapsed. He too led Enron through bankruptcy.
“In any bankruptcy, this is just an incredible result,” Ray said Bloomberg.
John J. Ray III, CEO of FTX Group. Photo Credit: Tom Williams/CQ-Roll Call, Inc via Getty Images
Creditors will learn how to vote on the plan after a court hearing next month.
According to Ray, this is the first time a record two million customers and other creditors can seek settlement in a bankruptcy case.
FTX was able to raise money to pay off its debts by selling assets like it $900 million in stock at the AI firm Anthropic.
Although the crypto exchange will likely be able to pay its customers, there will likely be nothing left SHAREHOLDERS after considering the government's claims, according to Bloomberg. Under the US bankruptcy lawall debts must be paid before equity holders can collect.
Payments to customers will reflect cryptocurrency prices in 2022, not what they are now. Crypto prices have risen in two years, leaving some social media users unhappy about their return on investment.
“If you had Bitcoin at the time of the collapse, it was worth 16k,” one Reddit user posted. “You will compensate for 16k, not Bitcoin which is now worth 62k. So it's a bit disingenuous.”
or Graphics statistician published on Wednesday confirms the estimated price of Bitcoin in November 2022 and its most recent price.
Connected: Sam Bankman-Fried sentenced to 25 years in prison for billion dollar crypto fraud
US prosecutors labeled FTX “one of the biggest financial frauds in American history” last year after customers lost $8 billion. Sam Bankman-Fried, the 32-year-old founder of FTX, was CONVICTED to 25 years in prison in March.