In the wake of a major cryptocurrency crash, FTX has unveiled plans to reimburse most of its clients within two years. The exchange pledges to repay nearly all outstanding funds, with certain customers set to receive additional compensation.
This photo illustration shows the logo of cryptocurrency FTX, reflected in its website on a laptop screen in Washington, DC, on November 13, 2022. (Photo: STEFANI REYNOLDS/AFP via Getty Images)
Revealing FTX’s Compensation Plan
FTX plans to reimburse most clients within two years following a significant crypto crash. The cryptocurrency exchange assures that nearly all owed funds will be repaid, with some customers receiving additional compensation.
According to the Associated Press, FTX acknowledges a debt of approximately $11.2 billion to creditors while estimating available funds for distribution between $14.5 billion and $16.3 billion.
The filing outlines a plan to fully settle claims and pay supplementary interest payments of 9% to remaining creditors.
However, this compensation may offer little solace for traders who experienced losses during the exchange’s collapse.
Bitcoin‘s value surged from $16,080 when FTX filed for bankruptcy protection in November 2022 to nearly $62,675 on Tuesday, resulting in a substantial loss for those who held onto their assets.
Submitted to the U.S. Bankruptcy Court for the District of Delaware, the plan stipulates that individuals and entities with claims amounting to $50,000 or less will receive approximately 118% of their claimed amount.
This provision encompasses nearly all of FTX’s clientele, covering around 98% of its customer base.
FTX’s Path to Redemption
FTX reported that it successfully retrieved funds through the monetization of various assets, primarily proprietary investments held by either the Alameda or FTX Ventures enterprises and litigation claims.
When FTX sought bankruptcy protection in November 2022, it was the third-largest cryptocurrency exchange globally, facing a situation akin to a bank run in the crypto realm.
Following the collapse of the exchange, CEO and founder Sam Bankman-Fried stepped down. In March, he received a 25-year sentence for his involvement in extensive fraud within FTX.
Bankman-Fried’s downfall came swiftly after notable achievements, including a Super Bowl advertisement, congressional testimony, and endorsements from prominent figures such as quarterback Tom Brady, basketball star Stephen Curry, and comedian Larry David.
The company announced the appointment of John Ray III as its new CEO. Ray is a seasoned bankruptcy litigator renowned for his role in resolving the aftermath of the Enron collapse.
In a prepared statement, Ray expressed satisfaction in presenting a Chapter 11 plan aimed at fully reimbursing non-governmental creditors and accrued interest, signaling a positive step forward for the company.
The disturbing revelations surrounding a company’s mismanagement, revealed after its assets were confiscated, would typically pose significant obstacles for any business seeking to recover. However, the context might differ for cryptocurrency exchanges.
Disclaimer:The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. NewsOfBitcoin.com does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
