FTX, the cryptocurrency exchange that imploded two years ago, has announced that nearly all of its customers will receive the money they are owed, and some may even receive more than their original claim.
In a court filing late Tuesday, FTX stated that it owes approximately $11.2 billion to its creditors but estimates that it has between $14.5 billion and $16.3 billion to distribute to them.
According to the filing, after paying claims in full, the plan provides for supplemental interest payments to creditors at a rate of 9% for most, to the extent that funds still remain.
However, this may be a small consolation for investors who were trading cryptocurrency on the exchange when it collapsed in November 2022. At that time, bitcoin was trading at $16,080, but crypto prices have since soared as the economy recovered while FTX’s assets were being sorted out.
As of Tuesday, a single bitcoin was selling for close to $62,675, representing a 290% loss for those investors, slightly less if accrued interest is counted.
Customers and creditors claiming $50,000 or less will receive about 118% of their claim, according to the plan filed with the U.S. Bankruptcy Court for the District of Delaware. This covers approximately 98% of FTX customers. FTX stated that it was able to recover funds by monetizing a collection of assets primarily consisting of proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.
FTX was the third-largest cryptocurrency exchange in the world when it filed for bankruptcy protection in November 2022 after experiencing the crypto equivalent of a bank run.
CEO and founder Sam Bankman-Fried resigned when the exchange collapsed and was sentenced to 25 years in prison in March for the massive fraud that occurred at FTX.
John Ray III, a long-time bankruptcy litigator best known for cleaning up the mess made after the collapse of Enron, was appointed as FTX’s new CEO. Ray expressed pleasure in being able to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
While FTX technically remains a company, its future is unclear. In early 2023, Ray said that he had formed a task force to explore reviving FTX.com, the crypto exchange. However, the sordid details of a company run amuck that emerged after its assets were seized could hamstring almost any business attempting a comeback.
The rival crypto exchange Binance briefly explored acquiring FTX before its collapse in late 2022. Binance’s founder and former CEO, Changpeng Zhao, was sentenced last week to four months in prison for turning a blind eye to criminals using the platform to move money connected to child sex abuse, drug trafficking, and terrorism. Despite this, Binance remains the largest crypto exchange in the world.
The bankruptcy court is set to hold a hearing on the dispersion of FTX assets on June 25.