Almost two years after the spectacular fall of FTX, a cryptocurrency exchange and crypto hedge fund, one of its mainstream operating arms seems to be on the verge of repaying its creditors. In a recent hearing, a Delaware bankruptcy court gave the go-ahead to FTX’s creditors’ reorganization plan—a major step towards one of the most intricate and far-reaching distributions of assets ever attempted.
Billions recovered for creditors
However, there are still some actions to be taken to make any distributions. The court has stated that FTX is likely to provide further information concerning the timelines for the restitution of funds in due course. It is claimed that the payments are to be made within 60 days from the effective date of the plan, implying that creditors will begin to receive some money before the close of this fiscal year.
Despite the fact that every news story only mentions him, the focus remains on the founder of FTX, Sam Bankman-Fried. The former CEO was sentenced and imprisoned for a number of offenses, including wire fraud, for twenty-five long years. His legal troubles have taken those close to him, including a few from an associated investment firm, Alameda Research, with some now serving prison sentences and others still awaiting trial.
Profits for creditors
Ethical issues aside, Bitcoin has appreciated by 260% over the period extending since the fall of FTX in 2022, which also appreciated the value of the assets recovered. FTX was seeking creditor investment and promptly started selling its strategic assets, including almost $900 million for a share in Anthropic, an AI powerhouse. Such asset disposals are the reason as to why FTX was able to provide such high repayments to its creditors.
What’s next for FTX and creditors?
Despite the approval of the reorganization plan, there are still actions to be taken that would allow for any distributions. The court has indicated that FTX will be providing timelines for the payouts shortly. Payments are said to be within 60 days after the effective date of the plan, suggesting that creditors should expect to receive some funds by the end of this year.
At the present time, however, the spotlight remains on Sam Bankman-Fried, the FTX founder. The ex-CEO was accused of multiple offenses, including wire fraud, and was sentenced to twenty-five years in prison. Those around him, including several associates from the related hedge fund Alameda Research, have also faced the course of law, with some already behind bars and some awaiting their turn in court.
FAQs: What You Should Know
When will creditors receive their payouts?
Creditors are expected to receive their payouts within 60 days after the plan’s effective date. FTX will make an announcement when the payout process is set to begin.
How much will creditors get?
98% of creditors will receive 119% of their allowed claims, meaning they will actually earn more than what they initially invested.
What assets have been recovered?
FTX has recovered between $14.7 billion and $16.5 billion in assets, including major investments in companies like Anthropic, which was sold for nearly $900 million.
What happened to FOX’s founder, Sam Bankman-Fried?
Sam Bankman-Fried was convicted of multiple criminal charges, including fraud, and sentenced to 25 years in prison for his role in the collapse of FTX.
This restructuring marks a significant step forward in winding down one of the largest crypto bankruptcies, with the next focus being on distributing the recovered assets to creditors globally.
