FTX Proposes Billions in Compensation
09 May, 2024 ● Crypto News
FTX’s latest proposal to compensate victims of its 2022 collapse now promises to repay all creditor claims plus "billions in compensation for the time value of their investments," although some experts believe it may still fall short.
In a statement on May 7, the bankrupt crypto exchange noted that the plan was “subject to being finalized and approved” by the United States Bankruptcy Court for the District of Delaware.
Only creditors with claims below $50,000 will be eligible for the 118% recovery, which FTX estimated covers “98% of the creditors of FTX by number.”
However, FTX's plan reimburses creditors based on the value of their assets at the time of its bankruptcy in November 2022, rather than at current market prices, which some creditors have been advocating for.
Since November 2022, the crypto markets have rebounded, with Bitcoin increasing by nearly 280%.
“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,” said FTX CEO and chief restructuring officer John J. Ray III.
FTX estimated the total value to be distributed to creditors will range between $14.5 and $16.3 billion.
The proposed repayment would occur within 60 days after the plan’s effective date.
Despite this, some industry experts have expressed dissatisfaction, as creditors won’t recover their stolen funds at current market prices.
“I understand why the bankruptcy process needs to work this way, but let’s not pretend victims are getting their money back,” BitGo CEO Mike Belshe posted on X on May 8.
The $32 billion cryptocurrency exchange collapsed in November 2022, exposing an $8 billion shortfall that its new management has been trying to recover.
Efforts to recover funds included an $884 million sale of shares in artificial intelligence firm Anthropic in March, which comprised a significant portion of FTX’s stake in the firm.
In January, FTX confirmed that its restructuring plans will not include relaunching the cryptocurrency exchange, which was one of the largest platforms by trading volume before its collapse.
Sources:
https://cointelegraph.com/news/ftx-plans-full-creditor-pay-back-plus-billions-compensation
