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FTX Clients Prepared to Recover All Funds Lost in Collapse| GuyWhoKnowsThings


Customers of the failed cryptocurrency exchange FTX are set to recover all the money they lost when the company collapsed in 2022 and receive interest on top of it, the company's bankruptcy lawyers said Tuesday.

The announcement marked a milestone in the attempt to recover the $8 billion in customer assets that disappeared when FTX imploded virtually overnight, triggering a crisis in the cryptocurrency industry. Under a plan filed in federal bankruptcy court in Delaware, virtually all of FTX's creditors, including hundreds of thousands of ordinary investors who used the exchange to buy and sell cryptocurrencies, would receive cash payments equal to 118 percent of the assets they owned. had stored on FTX. the lawyers said.

Those payments would flow from a pool of assets that FTX lawyers have gathered in the 17 months since the exchange collapsed, the lawyers said.

But the recoveries come with a caveat. The amount owed to clients was calculated based on the value of their holdings at the time of FTX's bankruptcy in November 2022. That means clients will not reap the benefits of a recent surge in the crypto market that sent the Bitcoin price at a record level. A customer who lost a Bitcoin when FTX imploded, for example, would be entitled to less than $20,000, even though one Bitcoin is now worth more than $60,000.

It will be months before payments begin. The plan must be approved by the federal judge overseeing FTX's bankruptcy, John T. Dorsey.

Still, a major recovery of customer money seemed unlikely when FTX collapsed after a run on deposits. Before its implosion, customers used FTX as a marketplace to buy and sell digital currencies and stored billions of dollars in cryptocurrency on the platform.

After the implosion, FTX founder and CEO Sam Bankman-Fried resigned and handed control to John J. Ray III, a corporate turnaround veteran who oversaw the fall of Enron.

Mr. Bankman-Fried was later convicted of major fraud in which he diverted billions of dollars in client savings to finance venture investments, political donations and other expenses. He was sentenced to 25 years in prison in March.

After taking over, Mr. Ray described the company as the biggest disaster I had never seen. But over the next few months, he and his team began the painstaking process of locating the missing assets.

Some of the recoveries arose from successful investments Bankman-Fried made during her tenure at FTX. In 2021, the company had invested $500 million in artificial intelligence company Anthropic. The rise of the AI ​​industry made those stocks much more valuable. This year, Ray's team sold about two-thirds of the FTX stake for $884 million.

FTX also reached an agreement to recover more than $400 million from Capital module, a hedge fund that Bankman-Fried had funded. And FTX lawyers filed lawsuits to recover funds from former company executives and others, including Mr. Bankman-Fried. parents.

Crypto experts have been expecting significant recoveries following the FTX bankruptcy for months. Some opportunistic investors They have purchased bankruptcy claims from exchange customers for pennies on the dollar, hoping to make a profit when payments begin.


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