FTX customers will recover all funds lost by collapsed crypto exchange
Chief executive says creditors will receive $11.2 billion, though will not benefit from bitcoin’s recent price gains
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Your support makes all the difference.Collapsed crypto exchange FTX has announced that customers will recover all of their funds lost following the company’s implosion two years ago.
Creditors will receive $11.2 billion (£9bn) after chief executive John Ray III unveiled a bankruptcy plan that will raise between $14.5bn and $16.3bn from selling off assets.
The repayments, which will include interest for some FTX users, will align to the value of bitcoin at the time of the exchange’s collapse. The price of the cryptocurrency has more than tripled in value since then, meaning the creditors will not benefit from bitcoin’s higher prices, however most will benefit from an interest rate of 9 per cent.
“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” Mr Ray III said.
Customers and creditors that claim $50,000 or less will get about 118 per cent of their claim, according to the plan, which was filed with the US Bankruptcy Court for the District of Delaware. This covers about 98 per cent of customers.
FTX said that it was able to recover funds by monetizing a collection of assets that mostly consisted of proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.
FTX, which was once the third-largest cryptocurrency exchange in the world, filed for bankruptcy protection in November 2022 after it experienced the crypto equivalent of a bank run.
The company appointed its new CEO, a long-time bankruptcy litigator who is best known for having to clean up the mess made after the collapse of Enron.
“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” Ray said in a prepared statement.
The bankruptcy court is set to hold a hearing on 25 June.
In March, former CEO and founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in overseeing the crypto exchange’s demise.
Once known as the ‘Crypto King’, Bankman-Fried had previously been one of the industry’s figureheads, appearing before Congress and seeking celebrity endorsements from the likes of NFL star Tom Brady and comedian Larry David.
During his sentencing, Judge Lewis Kaplan said the 32-year-old had never uttered “a word of remorse for the commission of terrible crimes”.
Additional reporting from agencies.
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