FTX’s Bankruptcy Plan: Creditors to be Paid in Full and Interest Refunded
Collapsed cryptocurrency exchange FTX has announced that it will pay 100 percent or more of its debts to almost all of its post-bankruptcy customers and creditors. The new management, led by CEO John Ray III, plans to pay a total of $11.2 billion to creditors, with $14.5 to $16.3 billion from the sale of assets.
FTX has unveiled a comprehensive plan aimed at regaining the trust of customers and creditors following the massive collapse in late 2022. The new plan, filed with the bankruptcy court in Delaware, USA, gives people who mostly filed claims of $50,000 or less, which makes up about 98 percent of the company’s customer base, a chance to receive 118 percent of the amount they claimed.
Although the repayments, which will be structured based on the value of Bitcoin at the time of FTX’s collapse, raise the issue of not benefiting from Bitcoin’s subsequent appreciation, creditors will benefit from an interest rate of 9 percent. This provides some reassurance to creditors, considering the volatility of the crypto market.
Remarks by CEO John Ray III
After John Ray III was appointed as the new CEO of FTX, he stated that in the process of managing the company’s bankruptcy, they are working on a plan that will ensure that the amounts claimed will be paid in full with interest, especially for non-state creditors. Ray’s experience stems from his success in major bankruptcy cases such as Enron.
FTX and the Fall of Sam Bankman-Fried
FTX founder Sam Bankman-Fried was sentenced to 25 years in prison in March. Bankman-Fried, once a leading figure in the cryptocurrency market and known as the “Crypto King”, was heavily criticized for his role in the collapse. Judge Lewis Kaplan emphasized that Bankman-Fried showed no signs of remorse during the sentencing process.
Conclusion and Looking Ahead
The approval process of FTX’s payment plan for its creditors will continue with a hearing on June 25. The approval of this plan could set a precedent for other bankruptcies in the cryptocurrency industry and provide a solution to trust issues in the sector. With these steps, FTX will try to compensate for the large-scale loss of trust in the past.
