Collapsed cryptocurrency exchange FTX’s bankruptcy liquidation plan has been approved, which will allow FTX to repay approximately $16 billion in recovered assets to its customers. The decision, made by U.S. Bankruptcy Judge John Dorsey during a hearing in Wilmington, Delaware, on October 7, 2024, is also good news for the millions of customers who were unable to access funds after the exchange collapsed in November 2022.
About 98% of customers (with accounts worth $50,000 or less) can expect to receive repayment within 60 days of the program. The funds were provided as part of the recovery of cash, cryptocurrency and other assets owned by FTX during the bankruptcy proceedings. FTX said it plans to use $14.7 billion to $16.5 billion to repay customers, which is at least 118% of the value of customer accounts as of November 2022.
FTX said the outcome was a "victory for creditors" as it was able to recover cash and cryptocurrency assets it had said had been "missing." However, many customers also expressed disappointment. Clients say FTX’s collapse comes amid a strong recovery in cryptocurrency prices from 2022. The price of Bitcoin has soared from around $16,000 when FTX went bankrupt to more than $63,000 recently. Customers felt that the repayment structure did not truly reflect current market value and that they deserved higher repayments.
However, FTX later clarified that it could not just return the original crypto assets deposited by customers because they were mishandled by former CEO Sam Bankman-Fried. Bankman-Fried was subsequently sentenced to 25 years in prison for fraud.
Judge Dorsey praised FTX's restructuring efforts as a "model case" for handling complex bankruptcy proceedings. John J. Ray III, CEO and Chief Restructuring Officer of FTX, said that this all depends on people successfully recovering billions of dollars by painstakingly reconstructing FTX’s financial records and mobilizing assets around the world. Those recovery efforts also include the sale of other assets, including an investment in artificial intelligence startup Anthropic.
No exact timeline for customer repayments has been announced as FTX is still determining how to ensure accurate and fair repayments in more than 200 jurisdictions around the world.