The long legal saga surrounding the collapse of FTX is nearing its conclusion, with founder Sam Bankman-Fried imprisoned and other executives facing legal consequences. The focus now shifts to financial reparations for FTX customers, with an estimated $16 billion recovered from the once-$32 billion exchange.
Customers can expect to be repaid ‘in full, with interest’, but with a significant caveat: repayments are calculated based on a Bitcoin price of $16,871, far below its current value. This has sparked outrage among creditors, who argue that the promised “full recovery” is misleading.
The bankruptcy team, led by John J. Ray III, defends the plan, explaining that FTX held a fraction of the crypto assets reflected in customer balances at the time of bankruptcy.
A crucial court hearing is scheduled for October 7, where the US Bankruptcy Court for the District of Delaware will consider FTX’s proposed Chapter 11 Plan of Reorganization. If approved, it will enable FTX to repay over 98% of customers and unsecured creditors using USD calculations for crypto assets as of November 11, 2022.
Repayments are likely to occur after further ‘omnibus hearings’ scheduled for October 22, November 20, and December 12. If the Chapter 11 plan is confirmed on October 7, victims could receive payments before the end of 2024.
It’s crucial to note that the deadline for submitting claims to the bankruptcy estate has passed. Approximately 98% of customers with claims under $50,000 can anticipate receiving around 118% of their claim’s USD value, based on November 2022 crypto prices.
