By the end of the second quarter of 2024, customers of the bankrupt cryptocurrency exchanges FTX and FTX US may receive a return of over 90% of their assets after a proposed settlement was reached between FTX debtors and creditors.
On October 17, The FTX debtors claimed they had reached a “major milestone” in their Chapter 11 proceedings following “extensive discussion” about customer property disputes with the unsecured creditors’ committee, a committee of non-US customers, and class action plaintiffs.
The United States Bankruptcy Court in Delaware received notice of the proposed settlement from the FTX debtors on October 16. However, they must formally file by December 16 to request the court’s approval.
The “shortfall claim,” a component of the amended plan, represents an estimate made by the FTX debtors that customers of FTX.com and FTX.US would receive 90% of the assets that are available for distribution.
The anticipated shortfall claim is $8.9 billion and $166 million for FTX.com and FTX.US respectively. If the bankruptcy court approves, FTX predicts that this money will be disbursed by the end of the second quarter 2024.
FTX CEO and chief restructuring officer John J. Ray III expressed satisfaction with the settlement’s conditions, “Together, starting in the most challenging financial disaster I have seen, the debtors and their creditors have created enormous value from a situation that easily could have been a near-total loss for customers.”
Sam Bankman-Fried, the former CEO of FTX, is currently in the second week of his fraud trial. Former FTX engineering director Nishad Singh could reportedly spend up to 75 years in prison as a result of his involvement in allegedly defrauding FTX customers.
