The collapse of the crypto exchange FTX nearly two years ago left over nine million users in a precarious position, with a staggering $10 billion loss. Since then, claimants have been waiting anxiously for reimbursement. Now, there’s a glimmer of hope: the FTX bankruptcy estate has set its sights on initiating repayments to customers by the end of 2024. Let’s delve into the details of this significant development.
The Background
FTX was a thriving crypto exchange, known for its innovative features and substantial trading volumes. However, due to a combination of factors such as regulatory challenges, financial instability, or mismanagement, FTX faced significant difficulties. As a result, the exchange collapsed, leaving its users with substantial losses and creating uncertainty in the crypto community.
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Aiming for Full Payment by Year-End
The FTX bankruptcy estate has set its sights on initiating repayments to customers by the end of 2024. Discussions among the Joint Official Liquidators of FTX Digital in the Bahamas revealed this ambitious goal. The estate is navigating two parallel processes:
- Chapter 11 bankruptcy filed in Delaware.
- Official liquidation process of FTX Digital, a Bahamas-based subsidiary of the exchange.
Both arms of the estate have committed to cooperation, ensuring that creditors can lodge their claims with either entity and receive the complete value owed to them. According to notes from the meeting, the Chapter 11 Debtors and the Joint Official Liquidators “have a shared goal to make the first interim distribution by the end of 2024 to creditors with admitted claims and satisfactory KYC documentation.”
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Claim Submission and Payout Structure
Creditors have been able to submit claims on the FTX claims portal since March 1, when the portal went live. Users have until May 15 to choose one of the two bankruptcy processes and submit a claim. However, the deadline is expected to be extended to at least June 2024, per the meeting.
While this announcement marks a milestone achievement, the approach remains hard to swallow for most creditors. In December 2023, the FTX Debtors’ Estate submitted a revised Chapter 11 plan proposing repayment based on the cash value of digital assets held on the exchange at November 11, 2022 rates (the date of the bankruptcy). However, FTX creditors have contested this proposal, arguing that it was unfair due to the significant rise in crypto prices since the bankruptcy date.
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For instance:
- Solana, representing over 34% of FTX’s holdings, has skyrocketed by over 1600% to $200 since November 2022.
- Bitcoin, representing 15% of the exchange’s holdings, has surged to a new all-time high, recording a gain of over 370% to $73,000.
Addressing user complaints, FTX attorney Andy Dietderich asserted that US bankruptcy law was ‘very clear.’
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