2024-10-08
FTX Trading Ltd., operating as FTX.com,
announced that the United States Bankruptcy Court for the District of Delaware
has approved its Plan of Reorganization. This confirmation comes less than two
years after FTX's historic bankruptcy filing.
FTX's liquidation plan has received
court approval. This approval will allow FTX to fully repay its customers using
$16 billion in assets recovered since the exchange collapsed. The plan,
approved by U.S. Bankruptcy Judge John Dorsey, includes settlements with FTX
customers, creditors, and U.S. government agencies.
In the US Bankruptcy Court for the
District of Delaware. A U.S. Bankruptcy Judge John Dorsey has approved the
liquidation plan for the defunct crypto exchange FTX. This approval, which came
on October 7, 2024.
Under the confirmed plan, 98% of FTX's
creditors will receive about 119% of their allowed claims within 60 days of the
plan's effective date, pending certain distribution requirements. FTX estimates
that between $14.7 billion and $16.5 billion in assets have been recovered for
distribution.
These assets come from the chapter 11
Debtors as well as various global authorities, including the Joint Official
Liquidators of FTX Digital Markets in the Bahamas and the U.S. Department of
Justice, among others.
The collapse of FTX in November 2022
sent shockwaves through the cryptocurrency world, leading to a loss of trust
and a significant downturn in the market.
The case has been described as "a
model case for how to deal with a very complex Chapter 11 bankruptcy
proceeding" by U.S. Bankruptcy Judge John Dorsey. The plan's success is
attributed to the diligent work of professionals who have managed to recover
cash and crypto assets that had gone missing during the company's chaotic
collapse. Additionally, FTX raised further funds by selling off other assets,
including investments in tech companies.
However, the plan has not been without
its critics. Some customers have expressed disappointment that the liquidation
plan does not reflect the recent rises in cryptocurrency values. For instance,
the price of Bitcoin has risen significantly since November 2022, and some
customers feel that the repayments should reflect this increase.
Despite these criticisms, the approval
of the liquidation plan is a crucial step in addressing the fallout from one of
the most significant collapses in the history of cryptocurrency exchanges. It
demonstrates a commitment to repaying affected users and restoring faith in the
crypto market. As the industry continues to mature, this case will likely serve
as a precedent for how to handle similar situations in the future.
John J. Ray III, FTX’s Chief Executive
Officer and Chief Restructuring Officer, called the court's approval a
"significant milestone" on the path to reimbursing customers and
creditors. Ray credited the recovery of billions of dollars to the "tireless
work" of the FTX team and cooperation from governments and agencies
worldwide. He also noted that the distribution process will cover more than 200
jurisdictions globally and is expected to be the largest bankruptcy estate
asset distribution in history.
