They will miss out on big gains in the crypto market, though.
The scandal-plagued cryptocurrency exchange, FTX, has submitted a plan to a bankruptcy court in order to repay creditors who owned cryptocurrency at the exchange. The vast majority of consumers are going to get their money back with interest, despite the fact that they (and the debtors) have missed out on huge profits in the cryptocurrency market since the catastrophic collapse of FTX in November 2022. Since then, the price of Bitcoin has more than quadrupled.
It is the intention of FTX to make a complete repayment to non-governmental creditors, taking into account the value of their claims as decided by the bankruptcy court. Consequently, 98 percent of creditors, which includes those who have claims worth up to fifty thousand dollars, will receive 118 percent of the total amount of their claims that are permitted. Additionally, FTX will compensate other creditors with billions of dollars “for the time value of their investments,” which will be returned to them in addition to the money that they have already received.
Those who owe money to the government are eligible to receive payments with an interest rate of nine percent. One of the parties with whom FTX has reached a settlement agreement is the Department of Justice. Other stakeholders include the Internal Revenue Service.
The business asserts that it would be able to settle disagreements with private and government parties “without costly and protracted litigation” if its plan of reorganization were to be approved without question. FTX estimates that it will be able to disperse cash amounts ranging from $14.5 billion to $16.3 billion in total during the entire process.
On the other hand, you could be asking from what source exactly all of this money is from. At the time that FTX submitted its petition for protection under Chapter 11 of the United States Bankruptcy Code seventeen months ago, the company owned only 0.1 percent of the Bitcoin and 1.2 percent of the Ethereum that its customers believed it had.
A statement made by FTX stated that it was able to generate revenue from “an extraordinarily diverse collection of assets.” The majority of these assets were either proprietary investments owned by the Alameda or FTX Ventures businesses or lawsuit claims. Approximately eight billion dollars’ worth of real estate, political donations, and venture capital investments were among the assets that FTX CEO John J. Ray III and his team were able to locate, as reported by TechCrunch.
Just a few weeks after the co-founder and former CEO of the company, Sam Bankman-Fried (also known as SBF), was sentenced to 25 years in jail, the company submitted the revised plan of reorganization. It was in November when he was convicted guilty of the allegations against him, which included conspiracy to commit money laundering and wire fraud crimes.