FTX has billions more than needed to repay bankruptcy victims
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FTX assets have been given a massive jolt by the crypto rebound, which saw the price of Bitcoin roughly quadruple since late 2022.
PHOTO: REUTERS
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Washington - Cryptocurrency exchange FTX has amassed billions of dollars more than it needs to cover what customers lost in its November 2022 collapse,
The extra cash will be used to pay interest to the company’s more than two million customers, marking a rare outcome since creditors typically receive just pennies on the dollar in US bankruptcies.
Once it finishes selling all of its assets, the company will have as much as US$16.3 billion (S$22 billion) in cash to distribute, according to a company statement. The company owes customers and other non-governmental creditors about US$11 billion.
Earlier in 2024, the company had about US$6.4 billion in cash. The increase is due mostly to a general spike in prices for various cryptocurrencies, including Solana, a token heavily backed by convicted fraudster and FTX founder Sam Bankman-Fried. The company has also sold dozens of other assets, including various venture capital projects like a stake in the artificial intelligence company Anthropic.
The latest figures underscore the surprising outcome for FTX, whose collapse drew comparisons to Enron’s fraud-fuelled downfall and the unravelling of Bernie Madoff’s Ponzi scheme.
But restructuring advisers have since been tracking down the company’s assets and untangling a web of accounts scattered around the world. Those recoveries have been given a massive jolt by the crypto rebound, which has caused the price of Bitcoin to roughly quadruple since late 2022.
In a document filed on May 7 in US bankruptcy court, restructuring advisers laid out new details of their proposal to distribute the cash to creditors and end the Chapter 11 case. Known as a disclosure statement, the document is designed to help creditors vote on the proposed payout plan.
US Bankruptcy Judge John Dorsey will take that vote into consideration when he decides whether to approve the plan sometime later this summer. Judge Dorsey is scheduled to hold a hearing in late June on the disclosure statement and the voting procedures.
FTX filed for bankruptcy in November 2022 Bankman-Fried was later convicted of fraud.
