TLDR:
US bankruptcy court approved FTX liquidation plan to repay customers $16 billion
Initial distribution of $1.1 billion expected to support crypto market
Repayments to smaller creditors may begin in December, larger claims in first half of 2025
Full repayment process could take up to 3 years
FTX plans to repay 98% of customers within 60 days of plan’s effective date
The US bankruptcy court has officially approved the liquidation plan for cryptocurrency exchange FTX, paving the way for the company to repay its customers using approximately $16 billion in recovered assets.
This decision marks a significant milestone in the aftermath of one of the largest crypto exchange collapses in history.
FTX reported having $12.6 billion available for customer repayments, a figure that could increase to $16.5 billion as additional assets are identified and liquidated. The initial distribution is expected to be around $1.1 billion, which experts believe could provide support for major cryptocurrencies like Bitcoin, Ethereum, and Solana.
The repayment process is set to begin soon, with smaller creditors potentially receiving payments as early as December. Larger claims are expected to be addressed in the first half of 2025. However, the full repayment process could take up to three years to complete, according to industry analysts.
Under the approved plan, FTX aims to repay 98% of its customers – those who held $50,000 or less on the exchange – within 60 days after the plan’s effective date.
The company estimates that customers will receive at least 118% of the value in their accounts as of November 2022, when FTX filed for bankruptcy.
The bankruptcy plan is built on a series of settlements with FTX customers, creditors, U.S. government agencies, and liquidators appointed to wind down FTX’s operations outside the United States. These agreements allow FTX to prioritize repayment to exchange customers before addressing potentially competing claims from government regulators.
FTX CEO John Ray highlighted the significance of this achievement, attributing it to the
“experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX’s books from the ground up and marshaling assets from around the globe.”
The approval comes at a critical time for the crypto market, as there is speculation that some of the repaid funds could be reinvested into the digital asset ecosystem. Alex Thorn, head of research at Galaxy Digital Holdings, suggested that the repayments could potentially influence market prices.
However, the response from customers has been mixed. While many are relieved to finally receive repayment, some have expressed disappointment at missing out on the recent crypto market rebound.
Since FTX’s collapse in November 2022, cryptocurrency prices have seen significant increases, with Bitcoin rising from around $16,000 to over $63,000.
The bankruptcy proceedings have also shed light on the extent of FTX’s mismanagement. At the time of its bankruptcy filing, FTX.com held only 0.1% of the bitcoin that customers believed they had deposited on the exchange. This discrepancy underscores the challenges faced by the company in repaying customers with the same types of cryptocurrency they originally held.
As part of the ongoing legal proceedings, Caroline Ellison, the former CEO of FTX’s trading arm Alameda Research, has agreed to hand over her assets to the exchange’s debtors. This settlement includes the transfer of assets not already confiscated by the government or used for legal fees.
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