Tech
FTX customers will recover all funds lost in the collapse of the cryptocurrency exchange
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Collapsed FTX cryptocurrency exchange announced that customers will recover all funds lost following the company’s implosion two years ago.
Creditors will receive $11.2 billion (£9 billion) after chief executive John Ray III unveiled a bankruptcy plan that will raise between $14.5 billion and $16.3 billion from asset sales.
Refunds, which for some will include interest FTX users will align themselves with the value of bitcoin at the time of the exchange’s collapse. The price of cryptocurrency Its value has since more than tripled, meaning creditors will not benefit from bitcoin’s higher prices, however most will benefit from a 9% interest rate.
“We are pleased to be able to propose a Chapter 11 plan that provides for 100% repayment of bankruptcy claim amounts plus interest to non-government creditors,” Ray III said.
Under the plan filed in the U.S. Bankruptcy Court for the District of Delaware, customers and creditors claiming $50,000 or less will receive approximately 118% of their debt. This covers approximately 98% of customers.
FTX said it was able to recover funds by monetizing a pool of assets that consisted primarily of proprietary investments held by the Alameda or FTX Ventures businesses or in lawsuits.
FTX, which was once the world’s third-largest cryptocurrency exchange, filed for bankruptcy protection in November 2022 after suffering the crypto equivalent of a bank run.
The company has named its new CEO, a longtime bankruptcy litigator best known for cleaning up the mess created after Enron’s collapse.
“We are pleased to be able to propose a Chapter 11 plan that provides for 100% repayment of bankruptcy claim amounts plus interest to non-government creditors,” Ray said in a prepared statement.
The bankruptcy court will hold a hearing on June 25.
In March, former CEO and founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in overseeing the demise of the cryptocurrency exchange.
Once known as the “King of Cryptocurrency,” Bankman-Fried had previously been one of the industry’s leading figures, appearing before Congress and seeking endorsements from celebrities such as NFL star Tom Brady and comedian Larry David.
During his sentencing, Judge Lewis Kaplan said the 32-year-old had never uttered “a word of remorse for committing terrible crimes”.
Further reports from agencies.