On Tuesday, May 7th, cryptocurrency exchange FTX released a statement saying that all non-government creditors of FTX, aside from governments, will receive full repayment in cash plus interest. This departure from previous practices that only involved asset value during bankruptcy marks a significant shift.
In November 2022, FTX declared bankruptcy and subsequently appointed experienced John J. Ray III as the company’s CEO and Chief Restructuring Officer to handle bankruptcy matters.
According to FTX’s statement, they forecast having cash reserves of $14.5 to $16.3 billion, specifically allocated to clients and other creditors.
Ray III attributed the improved financial prospects to the recent bull market in the cryptocurrency market, with Bitcoin alone appreciating over 200% since the bankruptcy.
Under the new plan, creditors with total claims below $50,000 (small creditors) will receive at least 118% repayment in cash within 60 days after the plan takes effect, subject to final confirmation and approval by the Delaware bankruptcy court.
It is reported that these small creditors make up 98% of all creditors. Other creditors will receive full repayment along with a total of several billion dollars in interest payments.
Ray III stated, “I want to thank all of FTX’s clients and creditors for their patience.”
FTX stated that it raised this funding by “monetizing an extremely diverse asset portfolio,” including through the sale of the exchange itself and a sister trading company, Alameda Research, operated by former CEO Sam Bankman-Fried, for risk investment.
Bankman-Fried has been sentenced to 25 years in prison. He admitted to not realizing the illegality of his actions and regrets the impact on customers awaiting payments due to FTX’s bankruptcy.
In March, FTX reached an $884 million deal with over twenty buyers, including Abu Dhabi investors, to sell most of its shares in the AI startup company Anthropic.
FTX’s recent announcement also confirmed its decision not to resume cryptocurrency exchange operations but instead to opt for restructuring and prioritize meeting creditors’ demands.
Cryptocurrency websites supported FTX’s move. Coinlive stated that FTX’s repayment plan is a significant effort in the history of bankrupt cryptocurrency exchanges. If accepted, the plan will become a model for digital financial companies in the post-crisis recovery period, emphasizing repayment and accountability.