New FTX Bankruptcy Plan Ensures Full Repayment With Interest

A Delaware judge has finally approved the FTX bankruptcy plan, allowing for cash repayments to customers along with interest, marking a crucial step in addressing the ongoing financial challenges for the now defunct crypto exchange.

Back in 2022, investigations revealed that FTX founder Sam Bankman-Fried and other executives misappropriated customer funds and produced misleading financial statements, leading to fraud allegations by both users and U.S. authorities.

Mixed Reactions

The approved plan could distribute up to $16 billion in recovered assets to FTX creditors. Judge John Dorsey of the U.S. District of Delaware Bankruptcy Court granted approval on October 7th. This decision follows two years after the cryptocurrency exchange collapsed, impacting thousands of customers worldwide.

The plan received support via 94% of claimants, with 98% of creditors expected to receive 118% of their claims in cash. However, not everyone agreed with the cash repayment option. Sunil Kavuri, representing the largest creditor group, advocated for repayments in-kind, particularly in cryptocurrencies. Judge Dorsey rejected this proposal, citing the drastic decline in the value of both FTX and its native token alongside the slim chance of recovery.

A Long Time Coming

The settlement effectively concludes the increasing number of cases surrounding FTX and its bankruptcy. Shortly after the Chapter 11 filing, Bankman-Fried and several top executives were arrested. Following a swift trial, he was convicted and sentenced to 25 years in prison. He has since filed an appeal, claiming judicial bias.

Caroline Ellison, who served as the former co-CEO of Alameda Research and was romantically involved with Sam, was dismissed regarding her position at Alameda and subsequently became a key witness in the criminal proceedings against Bankman-Fried.