In a landmark ruling, a federal bankruptcy court has given the green light to a reorganization plan for the failed cryptocurrency exchange FTX, paving the way for a massive payout to creditors. The plan, approved by Delaware Judge John Dorsey, will see over $14 billion distributed to customers who lost money when FTX collapsed in 2022.
According to FTX’s new CEO, John Ray, who took the reins after the company’s bankruptcy filing, the estate has collected between $14.7 billion and $16.5 billion in assets, which will be used to pay off creditors. This includes the sale of venture investments and other assets held by FTX and its affiliated companies.
In a significant development, 98% of FTX’s creditors will receive 119% of their original claim, thanks to the appreciation in value of some of the assets sold. The price of bitcoin, for instance, has surged by over 260% since FTX’s demise.
The bankruptcy estate has announced that it will make a separate announcement about the start date of the payout plan and when distributions are expected to begin. FTX’s founder, Sam Bankman-Fried, was convicted of multiple criminal counts last year, including stealing billions from customers, and is currently serving a 25-year prison sentence.
The FTX saga has sent shockwaves through the cryptocurrency industry, but this latest development brings a measure of closure to the thousands of customers who lost money in the collapse. As the dust settles, attention will turn to the lessons learned from this high-profile failure and how the industry can move forward with greater transparency and accountability.
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