The bankrupt crypto exchange, FTX has scored a major win in its recovery plan efforts. The U.S. Bankruptcy Judge John Dorsey approved its plan to repay creditors. The fallen exchange will use its recovered assets worth $16.5 billion for the repayment. FTX filed for bankruptcy two years ago and since then millions of investors were in confusion about the fate of their funds. As the court has given a green flag for the recovery plan, creditors are now looking for possibilities of getting their investments. Let’s explore what it means for an average user.
How the Repayment Plan Works
The plan will prioritize FTX’s smaller customers—those with account balances of $50,000 or less. In fact, about 98% of customers are expected to see repayment. Judge Dorsey even called the case a “model” for handling complex Chapter 11 bankruptcies. A lot of this came down to negotiations between FTX, creditors, customers, and regulators, paving the way for the bulk of customer repayments before FTX deals with its other obligations like tax debts and penalties.
One standout detail: non-governmental creditors could receive up to 119% of their claim amounts, way more than many expected. This is huge news, especially with Bitcoin bouncing back—its price skyrocketed from about $16,000 during the FTX crash to over $63,000 today. But not everyone’s thrilled. Some customers say they’re still losing out because they won’t get back the full current value of their assets.
The Aftermath of FTX’s Collapse
FTX’s fall from grace was ugly, to say the least. The founder, Sam Bankman-Fried, was hit with a 25-year prison sentence for fraud. He used customer funds to bail out his hedge fund, Alameda Research, which exposed serious mismanagement within FTX. Now, the company is negotiating with the U.S. Department of Justice about the $1 billion that was seized during Bankman-Fried’s trial. That money could help out FTX shareholders, though they’re last in line in bankruptcy cases.
Despite the drama, FTX’s new CEO, John Ray, highlighted the progress they’ve made. So far, the company’s managed to recover between $14.7 billion and $16.5 billion in property that’s ready to be distributed. Ray, known for handling Enron’s bankruptcy, called this plan a big step forward for FTX, as it’s expected to benefit creditors across more than 200 regions.
What’s Next for FTX Creditors?
Now that the plan’s greenlit, customers could start seeing payouts within 60 days after the plan’s official launch date—though that date isn’t set yet. A lot of former FTX users have been waiting nearly two years, and the anticipation is real. Getting their funds back is definitely a win, but it doesn’t erase the stress and uncertainty they dealt with when FTX first crashed.
This whole ordeal with FTX is a hard lesson in the risks of crypto investing. Although financial recovery is on the horizon, the emotional scars of FTX’s downfall will linger for many. How things turn out from here could shift the narrative for those who lost faith in crypto after FTX went under.
Also Read : U.S. Government Set to Auction $4.4 Billion in Bitcoin After Major Legal Win!
