FTX has received court approval for its bankruptcy plan, enabling the embattled cryptocurrency exchange to repay customers using up to $16.5 billion in assets recovered since its collapse. U.S. Bankruptcy Judge John Dorsey sanctioned the wind-down plan during a court hearing in Wilmington, Delaware, commending FTX’s recovery efforts as “a model case for how to deal with a very complex Chapter 11 bankruptcy proceeding.”
The approved plan is anchored in a series of settlements with FTX customers, creditors, U.S. government agencies, and liquidators tasked with unwinding FTX’s operations outside the United States. These settlements permit FTX to prioritize repayments to its customers before addressing claims from government regulators.
FTX aims to refund 98% of its customers, particularly those with balances of $50,000 or less, within 60 days following the plan’s effective date, which has yet to be determined. Once a dominant player in the cryptocurrency market, FTX fell from grace after revelations surfaced that founder Sam Bankman-Fried misappropriated customer funds to cover risky investments made by his hedge fund, Alameda Research. Bankman-Fried was sentenced in March to 25 years in prison for fraud and theft from FTX customers, although he is currently appealing his conviction.
The exchange is also in discussions with the U.S. Department of Justice regarding $1 billion in assets seized during the prosecution of Bankman-Fried. According to court documents, FTX shareholders—who typically do not receive anything in bankruptcy cases—may be eligible for up to $230 million from these seized funds.
FTX estimates that it will have between $14.7 billion and $16.5 billion available for creditor repayments, sufficient to reimburse customers at least 118% of their account balances as of November 2022, when the company filed for bankruptcy. Notably, U.S. government agencies, including the Commodity Futures Trading Commission and the Internal Revenue Service, have agreed to allow FTX to prioritize customer repayments over outstanding fines and tax obligations. Additionally, a liquidator in the Bahamas has consented to collaborate with FTX after previously contesting the company’s authority to file for bankruptcy in the U.S.
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