Investors who lost their money when the FTX exchange collapsed in November 2022 are about to receive their reimbursements. According to CNBC, the FTX exchange owes its customers around 11.2 billion USD, but the reorganization plan submitted to the US court suggests that the company has $14.5 – 16.3 billion to pay investors.
As per the plan, customers will receive approximately 118% of the claim amount for reimbursements of $50,000 or less. FTX has assured that 98% of customers will receive this amount within two months after the court approves the plan. Once the compensation payments are completed, the company will pay 9% interest to its creditors if there is still money left.
The founder of FTX, Sam Bankman-Fried, was sentenced to 25 years in prison for stealing billions of dollars from customers, and John J. Ray III has replaced him as CEO. Mr. Ray is a restructuring expert who helped Enron Corp return billions of dollars to its creditors. According to Mr. Ray, he has never witnessed such a failure in corporate governance and lack of reliable financial information as he did at FTX in his 40-year career.
FTX has sold investments in FTX and Alamed, the cryptocurrency hedge fund that Bankman-Fried heads. The company also sold shares worth 900 million USD in the artificial intelligence (AI) company Anthropic and has successfully recovered $2.6 billion in cash. Additionally, FTX has 38 properties in the Bahamas.
However, some creditors are not satisfied with the company’s proposal. Debts are denominated in USD, while the majority of FTX’s assets are highly speculative assets and shares in promising startups. Customers will receive an amount equivalent to the value of their assets at the time of FTX’s collapse, so they will not benefit even though the cryptocurrency’s price is recovering. In November 2022, Bitcoin cost around 20,000 USD, and it has now tripled in price.