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FTX to Repay Clients Following Crypto Crash, Compensation Details Revealed: Tech: Tech Times
In the wake of the cryptocurrency’s major crash, FTX has unveiled plans to refund most of its customers within two years. The exchange is committed to refunding almost all outstanding funds, with some customers set to receive additional compensation.
This photo illustration shows the logo of the FTX cryptocurrency, reflected in its website on a laptop screen in Washington, DC, on November 13, 2022. (Photo: STEFANI REYNOLDS/AFP via Getty Images)
FTX Compensation Plan Revealed
FTX plans to refund most customers within two years following a significant cryptocurrency crash. THE cryptocurrency exchange ensures that almost all funds owed will be refunded, with some customers receiving additional compensation.
According to the Associated Press, FTX recognizes a debt of approximately 11.2 billion dollars to creditors, estimating the funds available for distribution between 14.5 and 16.3 billion dollars.
The statement outlines a plan to pay claims in full and pay additional 9% interest to remaining creditors.
However, this compensation may offer little comfort to traders who suffered losses during the stock market crash.
BitcoinThe value of rose from $16,080 when FTX filed for bankruptcy protection in November 2022 to nearly $62,675 as of Tuesday, resulting in a substantial loss for those who retained their assets.
Filed in the U.S. Bankruptcy Court for the District of Delaware, the plan provides that individuals and entities with claims of $50,000 or less will receive approximately 118% of the requested amount.
This supply includes almost all of FTX’s customer base, covering approximately 98% of its customer base.
FTX’s path to redemption
FTX reported that it has successfully recovered funds through the monetization of various assets, primarily proprietary investments held by Alameda ventures or FTX Ventures, and lawsuits.
When FTX sought bankruptcy protection in November 2022, it was the third largest cryptocurrency exchange globally, facing a situation similar to a bank run in the cryptocurrency realm.
After the stock market crash, CEO and founder Sam Bankman-Fried he resigned. In March he received a 25-year sentence for his involvement in a large-scale fraud within FTX.
Bankman-Fried’s downfall came quickly after notable accomplishments, including a Super Bowl commercial, congressional testimony, and endorsements from such notable figures as quarterback Tom Brady, basketball star Stephen Curry, and comedian Larry David .
The company announced the appointment of John Ray III as new CEO. Ray is an experienced bankruptcy litigator renowned for his role in resolving the aftermath of Enron’s collapse.
In a prepared statement, Ray expressed satisfaction in filing a Chapter 11 plan to fully repay non-government creditors and accrued interest, signaling a positive step forward for the company.
Disturbing revelations about a company’s mismanagement that emerge after its assets are confiscated typically pose significant hurdles for any company trying to recover. However, the context may be different for cryptocurrency exchanges.
Related article: FTX Founder Bankman-Fried Convicted of Fraud, Recommends 40 to 50 Years in Prison
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