FTX Reorganization Plan Approved
08 Oct, 2024 ● Crypto News
United States Bankruptcy Judge John Dorsey has approved a plan to wind down operations for the bankrupt cryptocurrency exchange FTX, aiming to repay users as part of the liquidation process.
During an Oct. 7 hearing in the U.S. Bankruptcy Court for the District of Delaware, Judge Dorsey gave the green light to FTX’s liquidation plan.
This plan will allow the exchange’s debtors to repay approximately 98% of users around 119% of their claimed account value.
The court’s decision comes nearly two years after FTX filed for bankruptcy in November 2022, which led to criminal charges and civil lawsuits.
FTX CEO and chief restructuring officer John J. Ray III stated, “The Court’s confirmation of our Plan is a significant milestone on our pathway to distributing cash to customers and creditors,” adding that they are preparing to return 100% of bankruptcy claim amounts, plus interest, to non-governmental creditors through what will be the largest and most complex bankruptcy asset distribution in history.
However, critics of the reorganization plan have noted that while it aims to reimburse creditors for assets held in their FTX portfolios, it does not account for token gains made between November 2022 and 2024.
Sunil Kavuri, an FTX creditor who attended the hearing, claimed in September that users would only receive 10–25% of their cryptocurrency’s value back.
When FTX filed for bankruptcy in 2022, Bitcoin was priced around $16,000. By the time of publication, the price had surged to over $63,000.
For nearly two years, millions of FTX users have been unable to access billions of dollars in their accounts.
Several FTX executives are facing prison sentences for their involvement in the collapse of the exchange.
Former CEO Sam Bankman-Fried was sentenced to 25 years following his 2023 conviction. On Sept. 24, former Alameda Research CEO Caroline Ellison was sentenced to two years in prison.
It remains uncertain when the debtors will begin repaying FTX users following Judge Dorsey’s decision.
In September, false rumors spread online about FTX claims being settled.
The distribution of billions in funds to crypto users could have an impact on the market, similar to the effect of Mt. Gox repayments in July 2024.
Sources:
https://cointelegraph.com/news/judge-approves-ftx-liquidation-plan
