Bankrupt FTX Crypto Exchange Customers Could Recover Over 90% of Assets by Q2 2024
Summary:
Under a proposed settlement, FTX and FTX US customers could retrieve over 90% of their assets from the bankrupt crypto exchange by Q2 2024. The revision includes the "Shortfall Claim" projecting collective distribution of around $8.9 billion and $166 million for FTX.com and FTX US clients, respectively. This settlement is based on a series of negotiations involving the unsecured creditors' group, a non-U.S customer committee, and class action litigants. However, it is predicted that not all customers will be fully compensated and FTX.com may face a higher loss percentage.
FTX and FTX US clients, connected with the now-bankrupt crypto exchange, could retrieve more than 90% of their assets by Q2 2024 following a proposed resolution between FTX debtors and creditors. This significant progress in their Chapter 11 proceedings came on October 17, after intensive negotiations with the unsecured creditors' group, a non-US customer committee, and class action litigants over customer property disputes. The FTX Debtors provided a preliminary notice to a Delaware-based US Bankruptcy Court about the proposed resolution on October 16, but an official filing for court approval is required by December 16.
The revised plan incorporates the “Shortfall Claim,” where FTX debtors project that FTX.com and FTX US customers could collectively recoup 90% of distributable assets. The Shortfall Claim is projected to be approximately $8.9 billion for FTX.com and $166 million for FTX US. Upon court approval, FTX projects these assets to be distributed by Q2 2024. John. J. Ray III, FTX’s CEO and chief restructuring officer, voiced satisfaction with the settlement terms, applauding the collaboration with their creditors in what he described as the most challenging financial debacle he had ever encountered.
Under the revised plan, FTX will segregate the assets into three pots: assets earmarked for FTX.com clients, assets for U.S. clients, and a common pot of other assets. However, the Shortfall Claim only includes the two former categories. Additionally, the Plan Term Sheet constitutes a settlement between the Committee, the Debtors, the ad hoc customer committee, and other representatives. This resolution seeks to balance the rights of customer and non-customer creditors across the U.S. and foreign debtors.
However, FTX debtors predict that both exchange customers may not be fully compensated and FTX.com would likely experience a larger percentage of losses. A component of the proposed plan stipulates that customers who withdrew over $250,000 from the exchange within nine days of bankruptcy will face a 15% deduction on their claim. Nonetheless, FTX debtors state this would not apply to claims under $250,000. However, FTX reserves the right to exclude from the settlement any insiders, affiliates, and customers who may have possessed knowledge of the mixing and misuse of customer deposits and company funds. Former FTX CEO Sam Bankman-Fried is currently on trial for fraud relating to his role in FTX’s November bankruptcy.
Published At
10/17/2023 4:25:28 AM
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