After 17 months since the notorious collapse of FTX, those affected will now be able to pay back as part of a restitution plan.
FTX forecasted that a total value of funds between $14bn-$16bn was collected and is available after a recent bankruptcy hearing at the US Bankruptcy Court for the District Court of Delaware.
These funds will be distributed to customers and other creditors across the world who were affected by the November 2022 collapse of the cryptocurrency exchange, ultimately leading to FTX filing for bankruptcy shortly after.
FTX achieved this recovery by monetising a collection of assets. Most of these were proprietary investments held by the Alameda Research or FTX Ventures businesses, or litigation claims.
The plan reveals that debtors have not been able to benefit from the missing tokens during the bankruptcy cases. Instead, debtors had to look to other sources of recoverable value to repay creditors.
For creditors holding claims in an allowed amount of $50,000 or less, the plan creates a special “convenience class”. Because of this classification, if the plan is approved, the debtors anticipate that 98% of the creditors of FTX will receive approximately 118% of the amount of their allowed claims within 60 days.
John J. Ray III took over as the crypto exchange’s CEO after his disgraced predecessor, Sam Bankman-Fried, was arrested in his residency in the Bahamas in December 2022.
Ray III commented on his appreciation to the governing figures who were able to clear the restitution plan: “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.
“On behalf of FTX’s independent Board of Directors, I want to extend our deepest appreciation to the numerous governmental agencies, including the US Department of Justice, the Commodity Futures Trading Commission, the Internal Revenue Service and the Securities Commission of The Bahamas, for their tireless efforts, cooperation and assistance through this complex recovery process.
“I also want to thank the Joint Official Liquidators of FTX Digital Markets, the Ad Hoc Committee of Non-US Customers, the Class Action Claimants, BlockFi, the Official Committee of Unsecured Creditors and all of their professionals for their hard work in the development of the Plan and its resulting achievements.
“Finally, I want to thank all the customers and creditors of FTX for their patience throughout this process.”
Whilst the guilty verdict and 25-year prison sentence brought about a tentative end to the FTX saga, customers who lost out on substantial amounts of money invested in the platform were still reeling from the effects of the collapse.
This restitution plan will go a long way for a lot of those victims to find closure on the ordeal.
