NEW YORK: FTX received court approval of its bankruptcy plan on Monday (Oct 7), which will allow it to fully repay customers using up to US$16.5 billion in assets recovered since the once-leading crypto exchange collapsed.
US Bankruptcy Judge John Dorsey approved the wind-down plan at a court hearing in Wilmington, Delaware, saying FTX’s success made it “a model case for how to deal with a very complex Chapter 11 bankruptcy proceeding”.
The plan is built on a series of settlements with FTX customers and creditors, US government agencies, and liquidators appointed to wind down FTX’s operations outside the US.
The settlements allow FTX to use its assets to repay customers of its crypto exchange first, before paying potentially competing claims filed by government regulators. FTX plans to repay 98 per cent of its customers – those who held US$50,000 or less on the exchange – within 60 days after the plan’s effective date, which has not yet been determined.
Once among the world’s top crypto exchanges, FTX collapsed after news surfaced that founder Sam Bankman-Fried took customer money to pay off risky bets made by his hedge fund, Alameda Research. Bankman-Fried was sentenced in March to 25 years in prison for stealing from FTX customers, and he has appealed his conviction.
FTX remains in talks with the US Department of Justice over US$1 billion that the government seized during the criminal prosecution of Bankman-Fried. FTX shareholders, who would normally receive nothing in a bankruptcy proceeding, could receive up to US$230 million from the funds seized by the DOJ, according to court documents.
FTX has estimated that it will have between US$14.7 billion and US$16.5 billion available to repay creditors, enough to pay customers at least 118 per cent of the value in their accounts as of November 2022, the date that