Bitcoin

Steve

FTX, the once-prominent cryptocurrency exchange, has finally received court approval for its bankruptcy plan, which will enable it to repay customers using up to $16.5 billion in recovered assets. 
The approval came from U.S. Bankruptcy Judge John Dorsey, who praised the wind-down plan during a hearing in Wilmington, Delaware, calling it “a model case” for managing a complex Chapter 11 bankruptcy. 
The plan, supported by settlements with FTX customers, creditors, U.S. government agencies, and international liquidators, prioritizes customer repayment. Customers of FTX’s crypto exchange will be paid first, ahead of competing claims from government agencies. 
FTX expects to repay 98% of customers who held $50,000 or less on the platform within 60 days after the plan takes effect, though an exact date has not been set. 
FTX’s fall from one of the top cryptocurrency exchanges globally to bankruptcy was swift. In 2022, reports surfaced that founder Sam Bankman-Fried had diverted customer funds to cover risky bets at his hedge fund, Alameda Research. In March, Bankman-Fried received a 25-year prison sentence for fraud, a conviction he is currently appealing. 
FTX is also negotiating with the U.S. Department of Justice (DOJ) over $1 billion seized during Bankman-Fried’s criminal case. Court documents reveal that FTX shareholders could potentially receive up to $230 million from these DOJ-seized funds, an unusual outcome in bankruptcy cases where shareholders typically receive nothing. 
The bankruptcy plan outlines between $14.7 billion and $16.5 billion available to creditors, aiming to repay customers at least 118% of the value in their accounts from November 2022, the time of FTX’s collapse. 
To further facilitate this process, U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and the IRS, have agreed to let FTX prioritize customer repayments over any regulatory fines and tax debts. 
FTX CEO John Ray credited the plan’s success to the company’s diligent recovery efforts. “Today’s achievement is the result of a team of professionals who have tirelessly rebuilt FTX’s financial records and recovered billions in missing assets worldwide,” Ray said. 
Despite the plan’s progress, some customers have voiced frustration over their missed opportunity to benefit from the rebound in cryptocurrency prices since the market bottomed out in 2022. 
According to Reuters, Attorney David Adler, representing a group of objecting creditors, highlighted that Bitcoin’s price has surged from around $16,000 in November 2022 to over $63,000. These customers argue that they are not receiving true 100% compensation based on today’s valuations, as the plan references their account balances from two years ago. 
FTX explained that direct cryptocurrency repayment was impossible because the assets had been lost or misappropriated by Bankman-Fried. At the time of bankruptcy, FTX.com reportedly held just 0.1% of the Bitcoin customers believed they had deposited. According to Steve Coverick, one of FTX’s financial advisors, it would be “exorbitantly expensive” to purchase enough cryptocurrency on the open market to meet the original deposits. 
The plan marks a major step forward in winding down FTX’s operations and repaying affected customers. While some customers may be disappointed with the repayment structure, FTX’s success in recovering assets and settling with stakeholders offers hope for an orderly resolution to one of the cryptocurrency industry’s largest bankruptcies. 
The post <a href="https://www.unlock-bc.com/130525/ftx-begin-multi-billion-repayment-customers-receiving-court-approval/">FTX to Begin Multi-Billion Repayment to Customers After Receiving Court Approval</a> appeared first on <a href="https://www.unlock-bc.com">UNLOCK Blockchain</a>.

FTX to Begin Multi-Billion Repayment to Customers After Receiving Court Approval

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