Key takeaways
- FTX’s Chapter 11 reorganization plan was approved by a U.S. bankruptcy court on Monday.
- FTX creditors will receive 119% of approved claims in cash after court approval.
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FTX’s native token, FTT, soared more than 50% to $3.23 on Monday after FTX received court approval for its bankruptcy plan. The plan will allow FTX to fully repay its customers using $16 billion in recovered assets, including interest.
After the sharp rise, FTT now stands at around $2.72, according to CoinGecko data. The token’s value increased by 100% over the past two weeks as investors waited for a confirmation hearing.
On Monday, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware upheld FTX’s Chapter 11 reorganization plan. Nearly two years after its collapse, the FTX bankruptcy saga is coming to an end.
Judge Dorsey also noted that the value of FTX’s native token, FTT, is zero, reinforcing the exchange’s current inability to revive.
“I have no evidence today that the value of the FTT tokens would be anything other than zero,” Justice Dorsey said.
Under the restructuring plan, 98% of creditors will receive approximately 119% of their approved claims within 60 days after the plan takes effect. The decision follows a favorable vote from 94% of creditors, representing approximately $6.83 billion in claims.
The total funds recovered are estimated between $14.7 billion and $16.5 billion. The money includes the liquidation of assets of FTX itself, international branches, government agencies and collaborating parties.
“Today’s success is only possible thanks to the experience and tireless work of the team of professionals behind this case, who recovered billions of dollars by rebuilding FTX’s accounts from scratch and bringing together assets from around the world from there,” John J. said. Ray III, CEO and Chief Restructuring Officer of FTX. “It also reflects the strong collaboration we have had with governments and agencies around the world who share our goal of mitigating wrongdoing by FTX insiders.”
The exact date of implementation of the plan is not specified. Ray III said the funds would be distributed to creditors in more than 200 jurisdictions and the estate was working with specialist agents to ensure safe and efficient delivery.
Despite some opposition regarding payment methods, the project will make cash distributions, as was confirmed during Monday’s hearing. With today’s court approval, FTX customers are expected to receive reimbursement for their losses in the coming months.
FTX, once a respected crypto empire, collapsed in November 2022 after it was revealed that the company was using customer funds to make risky investments.
Former FTX CEO Sam Bankman-Fried was convicted of multiple counts of fraud and conspiracy, resulting in a 25-year prison sentence. Last month, he appealed his conviction for fraud and conspiracy.
Bankman-Fried’s circle of criminal partners, including Caroline Ellison, CEO of Alameda Research, also faced prosecution for their role in the FTX fraud. Ellison was sentenced to two years in prison last month. In addition to her prison sentence, she had to forfeit $11 billion due to her involvement in the stock market collapse.
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