The FTX bankruptcy estate is aiming to start repaying customers by the end of 2024. This process involves two separate proceedings, including the Chapter 11 bankruptcy overseen by a Delaware court in the US and the official liquidation of FTX Digital, a subsidiary based in the Bahamas. Both entities have agreed to work together, allowing creditors to submit claims to either party. The goal is to ensure that no creditor receives less than their entitled value. The first interim distribution to creditors with admitted claims and satisfactory Know Your Customer (KYC) documentation is planned for the end of 2024. Creditors have been able to submit claims through FTX’s claims portal since March 1, with the deadline expected to be extended to at least June 2024 based on recent developments. Claims will be valued as of the initial bankruptcy claim date on November 11, 2022.
FTX recently announced the sale of the majority of its shares in AI startup Anthropic for $884 million to raise funds to pay back creditors. FTX and its sister firm Alameda had invested $500 million in the AI firm in 2021, holding a 7.84% stake. The value of these shares doubled following a surge in the artificial intelligence sector, partly driven by the popularity of ChatGPT. Anthropic has received significant funding totaling around $7 billion from major tech players like Amazon, Alphabet, and Salesforce. These financial measures are being taken in preparation for the repayment process to creditors. The founder of FTX, Sam Bankman-Fried, has also faced legal issues and was sentenced to 25 years in prison after being found guilty on all seven counts related to fraud and money laundering. The Department of Justice sought a severe prison term of 40 to 50 years for Bankman-Fried due to the devastating consequences of FTX’s collapse.
Before his sentencing, Bankman-Fried was described as evasive and uncooperative during the trial by the Southern District of New York (SDNY) Judge Lewis Kaplan. The judge noted that Bankman-Fried was attempting to avoid answering questions directly and showed a lack of cooperation throughout the proceedings. Despite the severe sentence, there is a possibility for Bankman-Fried to reduce his prison time through good behavior. With no parole in federal criminal cases, he can potentially serve as little as 12.5 years if he receives all available jailhouse credit. The legal issues and sentencing of Bankman-Fried are part of the fallout from FTX’s collapse and the subsequent bankruptcy proceedings that are underway to repay customers and creditors. The collaboration between the Chapter 11 bankruptcy overseen in the US and the official liquidation of FTX Digital in the Bahamas is aimed at ensuring a fair distribution of assets to all parties involved.
The minutes of the first meeting of creditors of FTX Digital Markets indicate the target start date for repayments to customers by the end of 2024 with a USD value dated November 12. It is suggested in the meeting notes that FTX Digital Markets explore a partnership with OKX, particularly to facilitate the distribution of USDC. The strategic decisions and partnerships being considered are crucial in the process of repaying creditors and navigating the bankruptcy proceedings effectively. The involvement of various entities, such as AI startup Anthropic, in raising funds for repayment demonstrates the complex nature of the bankruptcy estate and the efforts being made to honor obligations to creditors. The meeting notes also indicate the extension of the claims submission deadline to June 2024, providing creditors with additional time to participate in the bankruptcy proceedings and receive distributions based on their claims. The coordination between the different bankruptcy processes and entities involved is essential for a successful resolution of the FTX bankruptcy case.
