FTX says nearly all of its customers will receive the money owed, but some will receive more, two years after the cryptocurrency exchange's collapse.
FTX says nearly all of its customers will receive the money owed, but some will receive more, two years after the cryptocurrency exchange's collapse.
FTX said in a court filing late Tuesday that it owes creditors about $11.2 billion. The exchange estimates it has $14.5 billion to $16.3 billion in funds to distribute to the exchange.
According to the filing, the plan provides for paying additional interest to creditors to the extent funds are still available after insurance claims are paid in full. The interest rate for most creditors is 9%.
This may be of little comfort to investors who were trading cryptocurrencies when the exchange collapsed. When FTX filed for bankruptcy protection in November 2022, the price of Bitcoin was $16,080. However, over the past two years, while FTX assets have been liquidated, crypto prices have soared as the economy has recovered. A single Bitcoin was selling for nearly $62,675 on Tuesday. This amounts to a loss of 290%, which is slightly less than what investors would have lost had they held these coins, taking into account the unpaid interest.
Customers and creditors who claim less than $50,000 will receive about 118% of their claims, according to the plan filed in U.S. Bankruptcy Court for Delaware. This covers about 98% of his FTX customers.
FTX said it was able to recover the funds by monetizing a collection of assets consisting primarily of proprietary investments and litigation claims held by Alameda and FTX Ventures' businesses.
FTX was the world's third-largest cryptocurrency exchange when it filed for bankruptcy protection in November 2022, experiencing what amounts to a run on cryptocurrencies.
CEO and founder Sam Bankman Fried resigned following the exchange's collapse. In March, he was sentenced to 25 years in prison for the massive FTX fraud.
Mr. Bankman Fried, who was convicted of fraud and conspiracy in November, has been involved in Super Bowl ads, testimony before Congress, and advertising for quarterback Tom Brady, basketball point guard Stephen Curry, and comedians. It was a dramatic fall from the height of success, including celebrity endorsements from stars such as Larry David.
The company has appointed John Ray III as its new CEO. He was a longtime bankruptcy litigator and is best known for cleaning up the mess after Enron's collapse.
“We are pleased to be in a position to propose a Chapter 11 plan that considers the return of 100% of the bankruptcy debt amount plus interest to non-governmental creditors,” Ray said in a prepared statement.
The bankruptcy court is scheduled to hold a hearing on June 25th.