Key Takeaways
- A new restructuring plan from the fallen FTX cryptocurrency exchange aims to provide 98% of its creditors with over 118% of allowed claims.
- FTX founder and CEO Sam Bankman-Fried has been sentenced to 25 years in prison for his involvement in the exchange’s downfall.
FTX’s New Plan Details
The new restructuring plan from FTX offers significant benefits to its customers:
- 98% of all customers, including those with claims of $50,000 or less, may receive up to 118% of their allowed claims within 60 days.
- FTX estimates that the total assets available for creditors could range between $14.5 billion and $16.3 billion, while the exchange owes over $11 billion to its customers.
- The plan is subject to approval by the U.S. Bankruptcy Court for the District of Delaware.
Comparison with Previous Plan
The new plan surpasses the previous offer by providing more favorable terms:
- The previous plan aimed to refund up to 90% of distributable assets to customers.
- Investors withdrawing over $250,000 shortly before the exchange’s collapse were expected to pay a 15% fee to avoid potential clawback.
Concerns About Repayment
While the new plan offers to return more than what customers lost, concerns remain:
- Repayment is based on Nov. 11, 2022, cryptocurrency prices, not the current value, which has significantly appreciated.
- For instance, the price of bitcoin (BTC) has increased from around $17,000 in November 2022 to over $62,500 today.
FTX’s bankruptcy in November 2022 was a result of commingling customer funds, leading to the inability of customers to withdraw over $8 billion in investments. The former CEO’s involvement in crypto fraud led to his sentencing to 25 years in prison in late March.
