Bitcoin
Most Crypto Company Customers Will Get All Their Money Back
Sam Bankman-Fried, co-founder of FTX Cryptocurrency Derivatives Exchange, arrives at court in New York, USA on Thursday, February 16, 2023.
Yuki Iwamura | Bloomberg | Getty Images
Almost all customers of the failed cryptocurrency exchange FTX will get their money back – and more, according to a court filing.
FTX estimates it owes creditors about $11.2 billion, according to a reorganization plan published Tuesday. The company said it has between $14.5 billion and $16.3 billion to distribute to creditors.
Customers whose claims total $50,000 or less will receive approximately 118% of the allowable claim amount, the plan says. Around 98% of creditors will receive this compensation.
The reorganization plan, which still needs to be approved by the bankruptcy court, will likely bring some relief to FTX customers, whose money has been locked up on the exchange since filed for bankruptcy protection in November 2022.
Famous FTX founder Sam Bankman-Fried it was convicted of seven criminal charges in early November, including charges related to the theft of billions of dollars from FTX customers. He received a 25-year prison sentence.
FTX was able to raise the money by selling a range of assets, including risky investments held by the exchange and other investments held by Alameda, Bankman-Fried’s crypto hedge fund.
One of FTX’s most prominent investments was in an artificial intelligence company Anthropic, a company supported per Amazon. FTX sold most of its stake in Anthropic this year, earning nearly $900 million.
FTX had to find other ways to raise money because the exchange was missing a large sum of cryptocurrencies.
“Consequently, debtors were unable to benefit from the appreciation in value of these tokens lost during the Chapter 11 cases. Instead, debtors had to look to other sources of recoverable value to repay creditors,” FTX said in a statement to press on Wednesday. .
Cryptocurrency prices have appreciated enormously since November 2021. Bitcoin has increased by about 270% since FTX filed for bankruptcy.
After Bankman-Fried stepped down, FTX named John Ray III as CEO. Talking about FTX in November 2022Ray said that “in his 40 years of legal and restructuring experience” he had never seen “such a complete failure of corporate controls and such a complete absence of reliable financial information as has occurred here.”
“We are pleased to be able to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy filing amounts plus interest to non-governmental creditors,” Ray said in the press release Wednesday.
—CNBC’s MacKenzie Sigalos contributed to this report.