Cryptocurrency exchange FTX, currently in the process of restructuring after bankruptcy, has announced a surprising compensation plan for investors. According to the new documents filed on the evening of May 7, 98% of creditors will receive back 118% of the original request amount, paid in cash within 60 days after court approval.
The plan also proposes to compensate 100% of the claim amount plus 9% interest to other non-governmental creditors, to compensate for the “time value of the investment”. However, this plan has not yet been approved by the unit overseeing the case, the Delaware Bankruptcy Court.
In the announcement, FTX said it expects to have between $14.5 and $16.3 billion in cash available for distribution by the time the plan is approved by the Delaware Bankruptcy Court. This is the result of the company's process of collecting and liquidating scattered assets worldwide over the past year and a half.
FTX's new restructuring plan will also address a range of claims from regulators and governments, including the Internal Revenue Service (IRS) and the US Commodity Futures Trading Commission (CFTC). :
The IRS agreed to settle its $24 billion claim in exchange for a $200 million cash payment and a $685 million penalty, to be paid only after all creditors and major entities Other governments are paid in full.
The CFTC and other government stakeholders have agreed to revoke their demand for fines as long as FTX users and investors are paid in full with interest. There are also plans to establish a special fund for “additional compensation” for certain customers and creditors.
The agreement compensates $875 million to BlockFi, FTX's largest creditor.
Other sources of value include investments by FTX and Alameda Research such as an 8% stake in AI startup Anthropic, which was sold to institutional investors for $884 million in March, or Solana tokens held by FTX – were liquidated for cash to satisfy compensation claims.
Although this compensation level is significantly higher than the previous estimate of 90% refund to customers, it still causes frustration for many creditors because they missed the opportunity to make a profit. FTX insists the market recovery is not the main driver behind their huge cash pile.
A hearing to discuss the proposed plan is expected to take place in June.