FTX Crypto Exchange Bankruptcy Plan Approved for $16.5B Repayment
FTX Crypto Exchange: Bankruptcy Plan Approved for $16.5 Bn Repayment
FTX, the once-prominent cryptocurrency exchange, has received court approval for its bankruptcy plan, which will allow it to repay customers using up to $16.5 billion in recovered assets. U.S. Bankruptcy Judge John Dorsey approved the plan during a court hearing in Wilmington, Delaware, praising it as a model for handling complex bankruptcy cases. The plan is based on settlements with FTX customers, creditors, government agencies, and international liquidators.
The main goal of the plan is to repay 98% of FTX's customers, especially those who held $50,000 or less on the platform. These repayments are expected to be made within 60 days of the plan's effective date, which has yet to be determined. FTX's collapse in 2022 was triggered by the misuse of customer funds by founder Sam Bankman-Fried, who was sentenced to 25 years in prison earlier this year. He has since appealed his conviction.
FTX Crypto exchange Customer Reactions and Concerns
While the bankruptcy plan aims to provide relief to most customers, there has been mixed feedback. Some customers, particularly those who had deposited cryptocurrency like Bitcoin, are disappointed that repayments are based on 2022 prices when the value of assets was much lower. For instance, Bitcoin was valued at $16,000 during the bankruptcy filing, but it has since risen to over $63,000.
David Adler, a lawyer representing some creditors, argued that FTX's claim of offering a 100% recovery doesn’t account for the massive rise in crypto prices since the platform's collapse. However, FTX explained that it cannot return the original crypto assets since most were misappropriated.
FTX Crypto exchange Next Steps
FTX continues to negotiate with the U.S. Department of Justice over an additional $1 billion in seized assets. The company has already recovered billions through asset sales and aims to provide creditors with up to 118% of the value of their accounts as of November 2022. Despite objections, the court has ruled against returning cryptocurrency to customers, focusing instead on cash-based repayments.
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