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by Lucas Bedwell on May 22nd, 2024

FTX Promises Full Refunds to Most Customers

In the latest filing to the court, it was revealed that about everyone who traded at FTX is likely to get their money back, and many of them may get more back than they lost. FTX’s restructuring plan filed on Tuesday, puts the conglomerate at about $11. 2 billion. However, in its reports, FTX claimed to have between $14. 5 billion and $16. 3 billion for distribution depending on the availability of Elvis Presley’s music.

As per the aforementioned details of the plan, the customers who have claims of $50000 or less will get their allowed claims more or less 118% which is very good news for approximately 98% of creditors. Awaiting approval from the bankruptcy court, this reorganization plan seems like the only ray of hope and recourse to reclaim their lost funds for FTX customers who have been locked out of their accounts since the company filed for bankruptcy in November 2022.

FTX’s Reorganization Plan Promises Full Refunds to Nearly All Customers

As for the failed cryptocurrency system called FTX, which is now under investigation, a new filing showed that customers would get almost all of their money back. This news comes when the founder of FTX exchange, Sam Bankman-Fried was indicted on seven criminal charges and recently convicted of all the charges including charges of stealing billions from FTX’s clients. This led to the creation of the FTX exchange, and Bankman-Fried was sentenced to 25 years in prison.

Unfortunately, through sales of assets and other operations, FTX has been successful in raising the necessary capital to pay its creditors. These comprised venture capital investments undertaken by FTX and a sister fund specializing in digital assets called Alameda Research. Of these, one of the most high-profile was Anthropic, an artificial intelligence company to which FTX invested and that has Amazon as another investor. A sold majority of its holding of FTX in Anthropic this year resulted in the realization of nearly $900 million.

This was necessary, especially given the missing volume of cryptocurrency and for the exchange to secure enough funds. Speaking in a press release on Wednesday, this is what FTX had to say, “The Debtors have not been able to enjoy the increased value of these missing tokens throughout the Chapter 11 cases. Instead of it, the Debtors rely on other areas of recoverable value for the crediting of the creditors.

After the FTX token faced turmoil in bankruptcy back in November 2022, there has been a dramatic increase in the cryptocurrency market. There are a lot of examples: for instance, the value of Bitcoin has risen by around 270 per cent. This increase, however, did not turn positive to the missing tokens, hence forcing FTX to look for other ways of raising capital for investments.

Afterwards, Bankman-Fried stepped down and FTX selected John Ray III as the new designation holder. In the context of the situation to be discussed in November 2022, Ray noted that in 40 years of experience in legal and restructuring matters, he had seen nothing like “such a rampant failure of all corporate governance measures and such a total lack of reliable financial reporting as in the present case. ”

This proposed resetting of FTX’s operations, although yet to be approved by the bankruptcy court, shall provide a significant remedy to customers affected by the crash. Their funds have been out of their reach for they lost their trust as the exchange declared bankruptcy in November 2022. According to the plan; it is proposed that customers with claims of $50,000 or less shall be treated to about 118% of the allowed claim, a rate that will benefit almost 98% of the creditors.

Measures already taken to reduce assets and other actions to be taken according to the proposed reorganization plan highlight FTX’s approach to ensuring that its customers are paid in full. It has been regarded as a critical turning point as FTX’s customers have been defrauded to lose a significant amount of money, and it is clear that there is a need for the regulation of the cryptocurrency business.

By Lucas Bedwell

With 3 years of trading experience across Forex, stocks, and cryptocurrencies, Lucas Bedwell has honed his market insights. His close connection to financial markets allows him to craft compelling copy, offering readers valuable perspectives and analyses that reflect his deep understanding of trading dynamics.

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