The FTX logo appears on umpire Jansen Visconti’s jacket during a baseball game against the Minnesota Twins on September 27, 2022, in Minneapolis.
Bruce Kluckhohn/AP
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Bruce Kluckhohn/AP
The FTX logo appears on the jacket of umpire Jansen Visconti during a baseball game against the Minnesota Twins on September 27, 2022, in Minneapolis.
Bruce Kluckhohn/AP
FTX says nearly all of its customers will get back what they are owed, two years after the cryptocurrency exchange collapsed, and some will get more.
FTX said in a court filing late Tuesday that it owes creditors about $11.2 billion. The exchange estimates that it has between $14.5 billion and $16.3 billion to distribute to them.
Following full payment of claims, the plan will provide additional interest payments to creditors, to the extent the amount remains available, the filing said. The interest rate for most creditors is 9%.
That may be little comfort to investors who were trading the cryptocurrency on exchanges when it collapsed. When FTX filed for bankruptcy protection in November 2022, bitcoin was priced at $16,080. But cryptocurrency prices have skyrocketed as the economy recovered while assets at FTX were reorganized over the past two years. One bitcoin on Tuesday was sold for nearly $62,675. That resulted in a loss of 290%, a little less than that if cumulative gains were taken into account, if those investors had held those coins.
Under the plan filed in the U.S. Bankruptcy Court for the District of Delaware, customers and creditors claiming $50,000 or less would receive about 118% of their claims. This covers approximately 98% of FTX customers.
FTX said it was able to recover capital by monetizing its asset pool, which primarily includes proprietary investments held by Alameda businesses or FTX Ventures or litigation claims.
FTX was the third largest cryptocurrency exchange in the world when it filed for bankruptcy protection in November 2022 after experiencing the crypto equivalent of a bank bankruptcy.
CEO and founder Sam Bankman-Fried resigned when the exchange collapsed. In March he was sentenced to 25 years in prison because of the big scam that happened at FTX.
Bankman-Fried was was convicted in November of fraud and conspiracy – a dramatic fall from the heights of success that included Super Bowl ads, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.
The company has named new CEO John Ray III, a longtime bankruptcy litigator who is best known for having to clean up the mess created after the collapse of Enron.
“We are pleased to propose a chapter 11 plan that contemplates the repayment of 100% of the bankruptcy claim plus interest to non-governmental creditors,” Ray said in a prepared statement. .
Technically, FTX is still a company but its future remains unclear. In early 2023, Ray said he had formed a task force to explore reviving FTX.com, the cryptocurrency exchange.
The sordid details about a company running amok that emerge after its assets are seized will stymie almost any business trying to make a comeback, but there can be different parameters as well. for cryptocurrency exchanges.
Rival crypto exchange Binance briefly explored acquiring FTX before it collapsed in late 2022. Its founder and former CEO, Changpeng Zhao, was sentenced to four months in prison last week for looking the other way when criminals use the platform to transfer money related to child sexual abuse, drug trafficking and terrorism.
Binance remains the world’s largest cryptocurrency exchange.
The bankruptcy court is scheduled to hold a hearing on the dispersal of FTX assets on June 25.
