Cryptocurrency Exchange FTX Set to Repay Customers in Full Following Collapse
In a surprising turn of events, cryptocurrency exchange FTX has revealed that it has accumulated billions more than necessary to cover customer losses resulting from its collapse in November 2022. This news comes as a relief to customers, who are now set to receive full recoveries, plus interest, in what is considered a rare outcome in US bankruptcy proceedings.
FTX benefited from a strong rally in cryptocurrencies, including Solana, which is backed by prominent figure Sam Bankman-Fried. As a result, prices for FTX claims have surged to 101 cents on the dollar, up from 95 cents just last week. The exchange is expected to have $16.3 billion in cash to distribute to customers and creditors, despite owing around $11 billion.
The collapse of FTX drew comparisons to infamous scandals involving Enron and Bernie Madoff. However, the exchange’s ability to repay all debts in full has surprised many in the industry. Large creditors, such as Sequoia Capital, Thoma Bravo, Temasek Holdings, and the Ontario Teachers Pension Plan, are set to benefit from the proposed payout plan.
FTX is now proposing a fund to pay creditors and is in the process of tracking down assets that are scattered around the world. The rebound in the crypto market has driven up prices of creditor claims, with some trades surpassing 100% of their face value. Despite this positive news, some creditors remain discontented, particularly as Bitcoin rallies above $62,000.
The proposed distribution of cash to creditors and the potential end of FTX’s Chapter 11 case is currently under consideration. An unprecedented vote involving over 2 million customers and creditors will determine the next steps in this complex case. US Bankruptcy Judge John Dorsey is expected to evaluate the proposed payout plan later this summer. FTX founder Sam Bankman-Fried, who was convicted of fraud in connection with the collapse, has certainly left a lasting impact on the cryptocurrency industry.
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