FTX victims would be elated to know that the managers of the bankrupted crypto exchange have announced plans to distribute the recovered assets of the company totaling between $14.5 billion and $16.3 billion to their customers .
Aside from the FTX victims, other creditors around the world at the time of its collapse in November 2022 would also be getting back money.
The recent progress occurred half a year following the conviction of FTX co-founder and ex-CEO Sam Bankman-Fried on seven charges involving fraud, conspiracy, and money laundering, resulting in the disappearance of approximately $8 billion in customers’ funds.
In March, Bankman-Fried was handed a 25-year prison sentence and instructed to forfeit $11 billion.
READ MORE: LemFi Suspends Ghana Operations, Here’s Why
According to a statement released on Wednesday by the company which is now being managed by a new CEO and Chief Restructuring Officer, John J. Ray III, the money to be distributed was realized from properties collected from the convicted founder, which have been converted to cash.
“FTX forecasts that the total value of property collected, converted to cash, and available for distribution will be between $14.5 and $16.3 billion.
“This amount includes assets under the control of the chapter 11 debtors as well as assets under the control of the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, the Joint Official Liquidators of FTX Australia, the United States Department of Justice and dozens of private parties that have cooperated in the recovery efforts,” the company said in the statement.
How FTX Was Able To Raise The Money
The company elaborated further on the means through which the funds were obtained, stating that it attained the recovery level by converting a remarkably varied assortment of assets into monetary value. The majority of these assets were investments exclusively owned by the Alameda or FTX Ventures enterprises, as well as legal claims resulting from litigation.
It added that FTX.com had a massive shortfall at the time of the Chapter 11 filing in November 2022 — holding only 0.1% of the Bitcoin and only 1.2% of the Ethereum customers believed it held.
“Accordingly, the Debtors have not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases. Instead, the Debtors have had to look to other sources of recoverable value to repay creditors,” it added.
FTX has announced its intention to fully compensate all non-governmental creditors according to the value of their claims as decided by the Bankruptcy Court. Additionally, the company is proposing a subordination agreement with governmental creditors, which will enable the payment of interest to the main classes of customers and creditors at a rate of up to 9% from the start of the chapter 11 proceedings until the distribution date.
“There also may be the opportunity for certain creditors to receive additional payments through the Supplemental Remission Fund described in Section 1.F of the Disclosure Statement,” it added.
The downfall of FTX
The downfall of FTX in 2022, previously a major figure in the cryptocurrency market, was a devastating event for investors and clients who suffered significant financial losses.
Accusations were made by prosecutors claiming that Bankman-Fried redirected funds from FTX to Alameda Research, a related hedge fund, for his own benefit, such as political contributions and property acquisitions.
Prosecutors detailed Bankman-Fried’s use of stolen funds to finance lavish personal expenditures, including luxury real estate acquisitions, risky investments, extravagant charitable donations, and political contributions.
Bankman-Fried was convicted by a 12-member jury in Manhattan federal court on all seven counts he faced following a monthlong trial, for embezzling $8 billion from customers of his cryptocurrency exchange, which is now bankrupt.
In March of this year, he was sentenced to 25 years in prison for his involvement in the cryptocurrency exchange’s downfall, marking the end of a widely publicized case that has shaken the crypto industry.
As a component of the sentencing, Judge Kaplan mandated Bankman-Fried to surrender an amount exceeding $11 billion, thereby highlighting the immense scale of the financial harm resulting from his actions.
