FTX's Bankruptcy Plan Gets Court Approval

Crypto News Breaking News

Written by Gode S.,

Web3 Market Analyst

Last Updated: October 11, 2024

Key Takeaways

FTX's bankruptcy plan has been approved nearly two years after filing, aiming to repay 98% of users and restore 119% of claimed balances;
FTX leadership views the court decision as a significant milestone in reimbursing creditors;
Critics argue the plan doesn't account for crypto price increases, leaving users to recover just 10-25% of their assets' current value.

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FTX's Bankruptcy Plan Gets Court Approval

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FTX has received court approval to proceed with its bankruptcy plan, almost two years after the crypto exchange collapsed and filed for bankruptcy in November 2022.

This proposal outlines how the exchange's debtors will distribute funds, aiming to restore about 119% of users' claimed account balances, ultimately repaying 98% of users.

The plan was confirmed by Judge John Dorsey of the US Bankruptcy Court in Delaware on October 7.

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John J. Ray III, FTX's current CEO and chief restructuring officer, called this court decision a significant achievement on the path to reimbursing creditors. He noted:

Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.

Despite the optimism from the FTX leadership, critics say the plan misses out on the potential gains users could have made as crypto prices soared. For example, Bitcoin BTC $90,340.70 was worth about $16,000 when FTX went bankrupt but is now over $63,000, making creditors like Sunil Kavuri voice concerns that users will only recover 10-25% of their crypto's current value.

Several former FTX executives have faced legal consequences. Sam Bankman-Fried, the former CEO, was sentenced to 25 years in prison earlier this year, while Caroline Ellison, who led Alameda Research, received a two-year sentence for her involvement in the collapse.

With billions at stake, the FTX liquidation could shape user recovery and have a ripple effect on the broader crypto market.