FTX Creditors to Gain 119% Return amid $14 Billion Payout

98% of FTX’s creditors will receive 119% of their allowed claim as of November 2022, meaning creditors will not only recoup their initial investments but also gain additional returns.

Key Notes

FTX creditors will receive 119% of their claims after a judge approved a $14 billion payout plan.Bitcoin's 260% surge and asset sales boosted FTX's funds above its $11.2 billion debts.The payout sets a precedent for handling large-scale cryptocurrency bankruptcies, influencing future cases.

In a landmark ruling on Monday, nearly all creditors of the defunct cryptocurrency exchange FTX are set to profit from the funds they invested, as approved by a federal bankruptcy judge in Delaware on Monday. This decision comes almost two years after FTX spiraled into bankruptcy, marking a significant turnaround for the company’s customers.

The approved reorganization plan involves disbursing over $14 billion to FTX’s customers, making it one of the largest asset distributions in bankruptcy history. John Ray, who took over as CEO following the company’s collapse in late 2022, expressed optimism about the future.

“Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history,” said John Ray in a statement on Monday.

FTX Creditors to Receive 119% of Claims

Ray, who also shepherded Enron through bankruptcy, added that the estate is finalizing arrangements to distribute funds to creditors around the world. The company has amassed between $14.7 billion and $16.5 billion in assets for distribution, exceeding its previously estimated debts of around $11.2 billion.

According to the plan sanctioned by Delaware bankruptcy Judge John Dorsey, 98% of FTX’s creditors will receive 119% of their allowed claim as of November 2022, the month when the exchange filed for bankruptcy protection. This means creditors will not only recoup their initial investments but also gain additional returns.

The substantial payout is partly attributed to the significant rise in Bitcoin’s value, which has surged approximately 260% since FTX’s downfall. FTX bolstered its funds by liquidating various assets, including venture investments held by the exchange and other holdings by Alameda Research, the crypto hedge fund founded by Sam Bankman-Fried.

Asset Sales Boost Recovery Efforts

Backed by Amazon, artificial intelligence (AI) startup Anthropic was FTX’s one of the most high-profile investments. FTX sold most of its stake in Anthropic earlier this year for nearly $900 million, contributing significantly to the recovery pool for creditors.

The bankruptcy estate has announced that it will provide a separate update regarding the effective date of the payout plan and the anticipated commencement of distributions. Creditors worldwide eagerly await this forthcoming announcement.

Meanwhile, a jury in a federal court in New York convicted Sam Bankman-Fried in November 2023, including charges related to stealing billions of dollars from FTX’s customers. He received a 25-year prison sentence, closing a tumultuous chapter in the company’s history.

The approved payout plan not only provides relief to creditors but also sets an example for handling large-scale bankruptcies in the cryptocurrency industry. Legal experts suggest that this case could influence future proceedings involving digital asset platforms.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

FTX (FTT) News, Cryptocurrency News, News