Customers of the failed cryptocurrency exchange FTX are set to recover all of the money lost when the company collapsed in 2022, along with interest on top of it. This promising news comes after the company’s bankruptcy lawyers revealed that the $8 billion in customer assets that disappeared during FTX’s implosion will be recovered. The plan, which has been filed in federal bankruptcy court in Delaware, ensures that virtually all of FTX’s creditors, including ordinary investors who used the platform to trade cryptocurrencies, will receive cash payments equivalent to 118 percent of the assets they had stored on FTX.
The recovery efforts come with a small caveat, however. The amount owed to customers is based on the value of their holdings at the time of FTX’s bankruptcy in November 2022, meaning customers won’t benefit from the recent surge in the crypto market that saw Bitcoin reach record highs. Despite this, customers who lost assets during the collapse will still receive a significant amount of their original investment back. The process of distributing payments is expected to take several months and will require approval from the federal judge overseeing FTX’s bankruptcy, John T. Dorsey.
When FTX collapsed after experiencing a run on deposits, the chances of customers recovering their funds seemed slim. However, the appointment of John J. Ray III, a seasoned corporate restructuring expert, as the new head of the company brought hope for a turnaround. With Ray’s leadership, the company began the arduous task of locating the missing assets and securing recoveries. Key victories included investments in companies like Anthropic, whose shares had significantly appreciated, leading to a lucrative sale that helped in the asset recovery process.
In addition to successful investments, FTX also reached agreements to recover funds from entities like Modulo Capital, a hedge fund backed by FTX’s former CEO, Sam Bankman-Fried. Legal actions were also taken against former company executives, including Bankman-Fried’s parents, to reclaim lost funds. This proactive approach, coupled with strategic investments and legal proceedings, significantly contributed to the recovery efforts. The progress made in tracking down missing assets and securing funds for customers has given hope to those affected by the collapse of FTX.
Crypto experts have been monitoring the FTX bankruptcy closely and have been anticipating substantial recoveries for customers. Some investors have taken advantage of the situation by purchasing bankruptcy claims from FTX’s customers at discounted rates in anticipation of profiting from the forthcoming payouts. Despite the challenges and uncertainties surrounding the collapse of FTX, the recent developments indicate a positive trajectory towards recovering customer assets and providing a glimmer of hope for those impacted by the crisis in the crypto industry.
