FTX says most customers will get all money back, less that 2 years after catastrophic collapse
FTX says almost all of its customers will get the money back they are entitled to, two years after the cryptocurrency exchange imploded, and some will get more than that.
FTX said in a court filing Tuesday that it owes its creditors about $11.2 billion. The exchange estimates that there is between $14.5 billion and $16.3 billion available to distribute to them.
The filing said that, upon full payment of claims, the plan provides for additional interest payments to creditors to the extent any funds remain. The interest rate for most creditors is 9%.
Customers and creditors claiming $50,000 or less will receive about 118% of their claim, according to the plan filed in the U.S. Bankruptcy Court for the District of Delaware. This includes approximately 98% of customers.
FTX said it could get money back by monetizing a collection of assets largely made up of the Alameda or FTX Ventures companies’ own investments, or from lawsuits.
FTX, once the third-largest cryptocurrency exchange in the world, filed for bankruptcy protection in November 2022 after experiencing the crypto equivalent of a bank run.
CEO and founder Sam Bankman-Fried resigned when the stock market collapsed. In March he was sentenced to 25 years in prison for the large-scale fraud at FTX.
Bankman-Fried was convicted of fraud and conspiracy in November — a dramatic drop after a high of success that included a Super Bowl ad, congressional testimony and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David .
The company named as its new CEO John Ray III, a veteran bankruptcy lawyer best known for helping to clean up the mess created by Enron’s collapse.
“We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claims plus interest for non-governmental creditors,” Ray said in a prepared statement.
That may be of diminishing comfort to investors at FTX. When the company sought bankruptcy protection in November 2022, Bitcoin was going for $16,080. Prices have soared while assets at FTX have been in good shape over the past two years. A single bitcoin sold for almost $62,675 on Tuesday. That amounts to a 290% loss if those investors had held onto those coins.
The bankruptcy court will hold a hearing on June 25.