FTX Cryptocurrency Exchange Recovers Billions, Customers Set to Receive Full Recoveries
In a rare turn of events in US bankruptcy proceedings, cryptocurrency exchange FTX has recovered billions more than needed to cover losses from its 2022 collapse. Lower-ranking creditors are typically left with pennies on the dollar, but FTX customers are set to receive full recoveries, plus interest, thanks to a strong rally in cryptocurrencies.
FTX has sold assets, including a stake in Anthropic, an artificial intelligence company, and prices for FTX claims have surged to 101 cents on the dollar from 95 cents last week. The exchange will have $16.3 billion in cash to distribute to customers and creditors, potentially allowing creditors to recover as much as 142% of what they are owed.
The price of creditor claims has soared with the rebound in crypto markets, reflecting the rise in Bitcoin from around $16,000 to over $62,000. However, some creditors argue that they are being shortchanged, as the claims are fixed to the date of filing for insolvency in 2022, causing them to miss out on the price increase.
A proposal to distribute cash to creditors and end the Chapter 11 case has been laid out in a disclosure statement. Over 2 million customers and other creditors are eligible to vote on the proposed payout plan, an unprecedented move in bankruptcy proceedings.
The FTX collapse, which drew comparisons to Enron Corp.’s fraud-fueled downfall and Bernie Madoff’s Ponzi scheme, resulted in the exchange filing for bankruptcy in November 2022 after its founder was convicted of fraud. The case is being handled in the US Bankruptcy Court for the District of Delaware, with a US Bankruptcy Judge set to consider the vote on the proposed payout plan later this summer.
“Infuriatingly humble tv expert. Friendly student. Travel fanatic. Bacon fan. Unable to type with boxing gloves on.”