Court Approves FTX Bankruptcy Cash Payment Plan
Date: 2024-10-08 Author: Gabriel Deangelo Categories: BUSINESS
A payment plan for customers of bankrupt cryptocurrency exchange FTX has been approved by Delaware Judge John Dorsey despite efforts to obtain in-kind reimbursement. The court’s decision calls for up to $16 billion in recovered assets.
Two years after the exchange collapsed, 98% of creditors have been approved to receive 118% of their claims in cash. Of these, 94% supported the plan, while Sunil Kavuri, the largest creditor at FTX, advocated for cryptocurrency reimbursement. However, Judge Dorsey rejected the proposal at a hearing on October 7. According to the court, the FTX token (FTT) has effectively lost its value and there is no reason to expect it to rise.
The ruling ends a chapter in the 2022 collapse of one of the world’s largest centralized cryptocurrency exchanges.
The FTX investigation found that Sam Bankman-Fried’s company had misused customer funds and falsified financial records, leading to fraud charges from both users and U.S. authorities. After a brief trial, Bankman-Fried was found guilty and sentenced to 25 years in prison. He is currently appealing the verdict, arguing that Judge Lewis A. Kaplan was biased. Other former FTX executives, such as Caroline Ellison, Nishad Singh, and Gary Wang, have struck deals with prosecutors that have allowed them to receive reduced sentences. Ellison, for example, was sentenced to two years in prison last month.
Meanwhile, FTX bankruptcy chief John J. Ray III has recovered much of the company's assets, describing the remainder of the Bankman-Fried empire as lacking standard corporate procedures. The idea of reopening the exchange was mooted in June of this year, but was ultimately abandoned due to a lack of investors.
