'An Unbelievable Result' in FTX Bankruptcy

Customers to have value of assets repaid, with interest
By Arden Dier,  Newser Staff
Posted May 8, 2024 6:11 AM CDT
'An Unbelievable Result' in FTX Bankruptcy
The FTX Arena logo is seen where the Miami Heat basketball team plays, Nov. 12, 2022, in Miami.   (AP Photo/Marta Lavandier, File)

Customers of Sam Bankman-Fried's imploded cryptocurrency exchange will get paid—with interest. FTX says it will have billions more than owed to customers once it wraps up the sale of its remaining assets, including investments held by Bankman-Fried's crypto trading firm Alameda Research and FTX Ventures. It expects to have $16.3 billion in cash, with debts around $11 billion, the BBC reports. The firm says nearly all of its customers will see their full losses returned as a result. "We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors," says FTX's new chief executive John Ray.

Lawyers say investors will receive payments equal to 118% of the assets they stored on FTX, based on November 2022 values, per the New York Times. "That means customers won't reap the benefits of a recent surge in the crypto market that sent the price of Bitcoin to a record high," per the Times. Interestingly, FTX says nearly all of the digital currencies held by the exchange when it collapsed are missing, per the BBC. The plan, filed in federal bankruptcy court in Delaware, still needs approval from Judge John T. Dorsey and it could be months before payouts are issued.

Still, the outlook is a good one considering few expected customers to be paid in the initial aftermath of FTX's collapse. "In any bankruptcy, this is just an unbelievable result," Ray says, per Bloomberg. The payments are made possible by some of Bankman-Fried's "successful investments," including $500 million in the artificial intelligence company Anthropic, per the Times, which reports Ray's team sold two-thirds of FTX's stake in the company for $884 million this year. FTX also recovered more than $400 million from hedge fund Modulo Capital. But while customers will be repaid, there will be nothing left for equity holders, including Sequoia Capital, Tom Brady, Gisele Bündchen, and the Ontario Teachers Pension Plan, per Bloomberg. (More FTX stories.)

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