FTX Cleared to Repay Billions to Customers After Bankruptcy Plan Approval
FTX has been cleared to repay billions to customers after its bankruptcy plan received court approval. With up to $16.5 billion in recovered assets, the plan promises to repay 98% of customers, offering a significant step in resolving the collapse of the once-major crypto exchange.
FTX, the once-prominent crypto exchange, has received court approval for its bankruptcy plan, allowing it to repay up to $16.5 billion to its customers. U.S. Bankruptcy Judge John Dorsey granted the green light during a hearing in Wilmington, Delaware, calling it a "model case" for handling a complex Chapter 11 bankruptcy.
The plan centers on repaying 98% of customers, especially those holding $50,000 or less, within 60 days after the effective date of the plan, which remains undetermined. This move follows a series of settlements with customers, creditors, U.S. agencies, and international liquidators, helping FTX prioritize customer repayments over other claims, including fines and tax debts.
A Resounding Endorsement for FTX’s Recovery Plan
Since its collapse due to founder Sam Bankman-Fried’s misappropriation of customer funds, FTX has recovered significant assets, bolstering the repayment process. The plan estimates between $14.7 billion and $16.5 billion in total recovery, enough to repay customers 118% of their November 2022 account values. However, some customers are frustrated, pointing out that the value of cryptocurrencies like Bitcoin has surged since FTX's bankruptcy, making the recovery of old account values a bitter pill to swallow.
While FTX’s financial recovery team has faced a monumental task in tracing missing funds, their efforts, alongside additional funds raised from selling tech company investments, have given creditors hope of a substantial recovery.
Customer Reactions and the Road Ahead
Despite the approval, some customers remain unhappy with the plan, particularly those who argue that current cryptocurrency prices should influence repayment. Attorney David Adler, representing four objecting creditors, highlighted that Bitcoin's price has surged since FTX’s collapse, leading to dissatisfaction with the fixed recovery amounts.
On the flip side, FTX CEO John Ray praised the achievement, citing the team’s tireless work in recovering assets globally and rebuilding the company's financial books from the ground up. The plan also holds a rare benefit for shareholders, who could see a return of up to $230 million from government-seized funds—a rarity in bankruptcy cases.
As FTX works towards implementing its repayment plan, questions remain about whether this settlement will restore trust in the broader crypto industry. Regardless, the approval marks a crucial step in resolving one of the crypto world’s most significant implosions.
