Sam Bankman-Fried News: FTX Bankruptcy Plan Approved

Sam Bankman-Fried News: FTX Repayment Plan Gains Court Approval

FTX Bankruptcy Plan Approved

FTX, the once-leading cryptocurrency exchange, received court approval on Monday to proceed with its bankruptcy plan, enabling it to repay customers using $16.5 billion in recovered assets. US Bankruptcy Judge John Dorsey, overseeing the proceedings, praised FTX's handling of the complex Chapter 11 case, calling it a model for such situations. The approval marks a significant step forward in FTX's wind-down process.

Repayment to Customers

Under the approved plan, FTX will prioritize customer repayment, aiming to repay 98% of customers who had balances of $50,000 or less on the exchange. These repayments are expected within 60 days of the plan's effective date, which remains undetermined. The plan also allows FTX to settle with US government agencies, creditors, and foreign liquidators, focusing on repaying customers first.

FTX's Collapse and Asset Recovery

FTX’s downfall in 2022 followed revelations that its founder, Sam Bankman-Fried, had used customer funds to cover risky bets through his hedge fund, Alameda Research. Bankman-Fried, who was sentenced to 25 years in prison, has appealed his conviction. FTX’s success in recovering assets, including selling off tech investments, has played a crucial role in its ability to repay customers.

Customer Reactions and Disputes

While the bankruptcy plan aims to fully repay customers, some are dissatisfied with the repayment structure, especially those who had deposited cryptocurrency. The value of bitcoin has risen dramatically since FTX’s collapse, leading some customers to argue that repayments based on 2022 values are unfair. However, FTX clarified that it’s impossible to return the crypto assets directly, as they had been misappropriated.

Future Considerations for Creditors

FTX has estimated a total of $14.7 billion to $16.5 billion available to repay creditors, with customers expected to receive at least 118% of their account value from November 2022. Discussions with the Justice Department are ongoing regarding $1 billion in assets seized during the criminal prosecution of Sam Bankman-Fried. Shareholders could receive up to $230 million from these seized funds. Despite challenges, FTX's focus remains on ensuring maximum recovery for its customers.

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