FTX Customers Awaiting Payouts: What to Expect

The saga of the FTX cryptocurrency exchange, which once boasted a valuation of $32 billion, is nearing its conclusion. As both criminal and bankruptcy proceedings wrap up, former FTX users are eagerly awaiting the return of their funds.

Founder Sam Bankman-Fried is serving a 25-year prison sentence at the Brooklyn Metropolitan Correctional Facility following his conviction, while key figures like Caroline Ellison, Nishad Singh, and Gary Wang have admitted guilt on federal charges. Former CEO Ryan Salame may also face prison, with his case to be decided in an upcoming hearing.

In the bankruptcy realm, approximately $16 billion has been recovered, with a commitment to repay customers in full with interest. However, the refunds are being calculated based on a Bitcoin price of $16,871, significantly below current market values.

This has led to frustration among creditors, who argue that the plan does not meet expectations. John J. Ray III, the head of the liquidation team, clarified that the discrepancy stems from FTX holding only a fraction of the assets customers believed they had.

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A key court hearing on October 7 will decide whether to approve FTX’s Chapter 11 Plan of Reorganization. If granted, the plan could facilitate refunds for over 98% of customers and unsecured creditors, based on the USD value of crypto assets as of November 11, 2022.

If the court approves, refunds may start by year-end following hearings on October 22, November 20, and December 12, which will address combining various claims for uniform processing. The claims submission period closed on September 29, 2023, with most claims under $50,000 expected to receive approximately 118% of their USD value based on the November 2022 crypto prices.

Should the plan be approved, FTX victims might finally see their long-awaited repayments by the end of this year.

Alexander Stefanov