The long and complicated story of the FTX cryptocurrency exchange, once valued at $32 billion, is finally coming to an end.
With the completion of criminal and bankruptcy proceedings, former FTX customers are anxiously waiting for their money back. The question on everyone’s mind is: When will FTX customers get their money back?
Founder Sam Bankman-Fried is currently serving a 25-year sentence at Brooklyn Metropolitan Correctional Facility following his conviction. Meanwhile, key executives Caroline Ellison, Nishad Singh and Gary Wang have pleaded guilty to federal charges related to the collapse of FTX. Former FTX Digital Markets CEO Ryan Salame could also face prison time, with oral arguments on September 12 likely to determine his fate.
On the financial front, bankruptcy proceedings are also nearing completion. Approximately $16 billion has been recovered, with FTX customers promised to be repaid “in full, with interest.” However, there is a major problem: the refunds are being calculated based on a Bitcoin price of $16,871, which is well below current market rates.
The plan has faced strong opposition from many victims. Creditors have criticized bankruptcy administrators for “continuously touting what they claim is a full recovery with interest,” which they claim falls short of expectations. In response, John J. Ray III, who led the FTX liquidation team, explained that they only held a fraction of the BTC and Ethereum that customers believed were in their accounts when FTX went into bankruptcy. “We can’t pay one creditor more without getting it from another creditor,” Ray said.
These tensions make the upcoming court date crucial. On October 7, the U.S. Bankruptcy Court for the District of Delaware will hold a hearing to consider approval of FTX’s proposed Chapter 11 Plan of Reorganization. If approved, the plan would allow FTX to repay more than 98% of customers and unsecured creditors “in full, with interest” using the USD value of its crypto assets as of November 11, 2022.
If the court approves the Chapter 11 plan, refunds could begin before the end of the year following one of three ‘omnibus hearings’ scheduled in 2024. These hearings will be held on October 22, November 20 and December 12 and will consider combining various claimants into uniform classes for refund.
However, the window for submitting claims has already closed. FTX customers were required to submit all paperwork by September 29, 2023. Approximately 98% of submitted claims were for amounts under $50,000. These customers can expect to receive approximately 118% of the USD value of their claims, again based on crypto prices as of November 11, 2022.
Ultimately, if the court approves FTX’s Chapter 11 plan on October 7, victims of the FTX collapse could see their long-awaited payouts by the end of this year.
*This is not investment advice.
