New bankruptcy proposal could return 90 cents on the dollar to FTX creditors by Q2 2024
FTX has a new plan that could return up to 90% of what customers are owed following the crypto exchange’s bankruptcy declaration last year.
In addition to claims against assets at their respective exchanges, around $8.9 billion is allocated for the reimbursement of FTX customers, while another $166 million will be available for FTX US customers.
Still, the debtors group overseeing the bankruptcy process from the FTX side cautioned that customers of both exchanges will not be repaid completely, and that FTX.com customers will see higher percentage losses. Former FTX CEO Sam Bankman-Fried is currently on trial for his role in the customer losses.
Any future recoveries for those who are making bankruptcy claims against FTX will depend on the resolution of tax and governmental claims, the FTX team’s asset recovery efforts, and fluctuations in the price of digital assets, among other variables, according to a company statement.
The debtors group, led by new FTX CEO and bankruptcy expert John J. Ray III, said that it planned to file the new proposal by Dec. 16.
(1/4) The FTX Debtors have announced another major milestone in their chapter 11 cases.
— FTX (@FTX_Official) October 17, 2023
If the bankruptcy court approves it by the second quarter of 2024, FTX.com and FTX US customers would collectively receive 90% “of distributable value worldwide,” the statement read.
While the new plan should benefit customers of the bankrupt crypto exchange, it will exclude any corporate insiders, affiliates, or customers who may have had knowledge of the commingling of funds between FTX and sister trading firm Alameda Research. It will also exclude any customers who may have changed their KYC (know your customer) information to extract funds as FTX collapsed.
“Together, starting in the most challenging financial disaster I have seen, the debtors and their creditors have created enormous value from a situation that easily could have been a near-total loss for customers,” Ray said in the statement.