Judge John Dorsey has approved the FTX bankruptcy plan, unlocking $6.6 billion for payouts.
98% of creditors will receive 118% of their claims, with distribution in fiat currency.
Payouts to creditors are expected to be completed in 4 to 8 weeks, totaling up to $16 billion.
Judge John Dorsey of the US Bankruptcy Court for the District of Delaware has officially approved the bankruptcy plan for FTX, marking a major step in the ongoing resolution of the failed cryptocurrency exchange’s collapse. This approval comes nearly two years after the trading platform’s fall and allows the exchange to begin payouts to its creditors.
The bankruptcy plan approval is expected to release $6.6 billion to creditors, following a vote that saw 94% support from creditors involved in the "dotcom customer entitlement claims." According to the plan's timeline, payouts are set to begin within four to eight weeks.
Under the court-approved plan, 98% of FTX creditors will receive 118% of their claims in fiat currency, despite some opposition to this form of payment. Sunil Kavuri, a representative for FTX creditors, had pushed for compensation in cryptocurrency but was overruled as the plan secured approval for dollar payouts. Total repayments under the approved plan could reach as much as $16 billion.
This milestone in the bankruptcy proceedings follows an extensive effort led by John Ray III, who assumed control of FTX after its collapse. Over the past two years, the firm has initiated legal action against rival exchanges like Bybit and has worked to reclaim donations made by former CEO Sam Bankman-Fried.
FTX had initially sought to recover as much of the mismanaged funds as possible, with the ultimate goal of distributing them to creditors.
The path forward for the FTX platform remains uncertain. John Ray III expressed interest in reviving the exchange early in the bankruptcy process.
However, attempts to attract new investors to back a reboot, dubbed FTX 2.0, have not materialized. With the bankruptcy process approaching a resolution, it is still being determined whether the revival plans will be revisited.
While FTX co-founder Sam Bankman-Fried has appealed his 25-year sentence, former Alameda Research CEO Caroline Ellison has accepted her two-year sentence, acknowledging her involvement in the firm's collapse.
