Court-approved plan promises up to $16.5 billion in compensation, marking a key recovery step post-FTX collapse.
In a significant development, creditors of the collapsed cryptocurrency exchange FTX are set to receive substantial refunds under a newly approved bankruptcy plan. This comes after FTX's dramatic bankruptcy in November 2022, which left millions of customers without access to their accounts.
The United States court has given the green light to FTX's restructuring plan, which aims to distribute between $14.7 billion and $16.5 billion to creditors. This plan has garnered support from 94% of the creditors, covering 98% of those affected. The goal is to compensate victims of the bankruptcy, ensuring they receive a fair share of the recovered assets.
Under this plan, customers are expected to recover about 119% of their account value at the time of bankruptcy. This is made possible by the recovery of assets worth between $14.7 billion and $16.5 billion, achieved partly through the sale of FTX's investments. However, some creditors have raised concerns that using old market prices for compensation might reduce the actual return to 20-25% of the assets.
Payments are anticipated to begin within 60 days of the plan's effective date. Smaller claims, those under $50,000, might be settled by the end of the year, while larger claims could see delays until mid-next year. This timeline provides a structured approach to ensure that creditors receive their due compensation in a timely manner.
FTX's bankruptcy in 2022 was a major event in the cryptocurrency world, leaving millions without access to their funds. The company's former boss, Sam Bankman-Fried, was convicted of stealing funds and sentenced to 25 years in prison. This restructuring plan marks a crucial step in resolving the financial chaos left in the wake of FTX's collapse.
