Bankrupt cryptocurrency exchange FTX has amassed billions in extra money to fully repay its 2 million customers, marking a new twist in bankruptcy proceedings.
Cryptocurrency exchange FTX which went bankrupt in late 2022 has accumulated billions more than it needs to cover losses incurred during its collapse in November 2022. In a commentary to Bloomberg, FTX CEO John Ray called the milestone an “unbelievable result,” signaling the exchange’s readiness to fully reimburse its over 2 million customers.
With the pending sale of its assets, FTX is expected to possess approximately $16.3 billion in cash, exceeding its $11 billion debt to customers and other non-governmental creditors, Bloomberg notes. Although the bankruptcy victims will receive payments in full with interest, court documents indicate that equity holders are unlikely to receive any residual amounts.
Depending on their claim types, some creditors could potentially recover up to 142% of their owed amounts, while most customers may receive 118% of their account balances at the time of FTX’s bankruptcy filing.
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FTX’s restructuring advisers have proposed establishing a fund to compensate certain creditors, utilizing funds that would have otherwise been allocated to regulatory bodies. However, the timeline for this initiative remains unclear, although payouts are expected in the coming months. Amid the news, the exchange’s native token FTX Token (FTT) soared to $2, gaining over 33%, according to data from CoinMarketCap.
FTX collapsed in November 2022 amid allegations of embezzlement and misappropriation of billions of dollars in customer funds involving its owners and affiliated hedge fund Alameda Research. Sam Bankman-Fried, the founder of the exchange, was sentenced to 25 years in prison and ordered to reimburse $11 billion.
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