The FTX Bankruptcy Plan: A Path to Full Recovery plus Interest for Creditors. An Attorney General Comment on the Cosmic Coin Market
FTX says that nearly all of its customers will receive the money back that they are owed, two years after the cryptocurrency exchange imploded, and some will get more than that.
Filed on Tuesday, the FTX bankruptcy plan charts a path to a full recovery, plus interest, for practically all creditors—made possible, according to FTX, by the liquidation of billions of dollars’ worth of investments made by the exchange’s venture capital arm, FTX Ventures, and its sister company, Alameda Research.
1,600 claims were made up of the voting block that began in January. The leaders of the block will attempt to stop the vote on the new plan, which is due to be held in June. The recovery percentages are derived from a fake baseline. It’s a false narrative,” says Sehgal. It’s an insult to the people who have money.
FTX collapsed in the late 90’s after the rival exchange, Binance, briefly explored acquiring it. Its founder and former CEO Changpeng Zhao, was sentenced last week to four months in prison for looking the other way as criminals used the platform to move money connected to child sex abuse, drug trafficking and terrorism.
The IRS received a $200 million upfront payment as part of the proposed settlement, but they decided to suspend high-value claims against FTX until the people who paid for the company were repaid.
Customers and their agents that claim $50,000 or less will be the majority of the claim according to the plan. 98% of FTX customers are covered by this.
The filing said that after paying claims in full, the plan provides for supplemental interest payments to creditors, to the extent that funds still remain. The interest rate for most people is 9%.
The Bankman-Fried convictions and the fate of FTX and the search for a new CEO: John Ray III’s quest for reversible recovery
FTX said that it was able to recover funds by using a collection of assets that included proprietary investments from the businesses, or litigation claims.
The dramatic fall from success that included a Super Bowl ad, testimony before Congress and endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David is what led to the convictions of Bankman-Fried.
The company appointed as its new CEO John Ray III, a long-time bankruptcy litigator who is best known for having to clean up the mess made after the collapse of Enron.
“We are going to propose a chapter 11 plan that will allow the return of all the claims plus interest,” Ray said in a prepared statement.
FTX is classified as a company so it’s unclear what its future will be. In early 2023, Ray said that he had formed a task force to explore reviving FTX.com, the crypto exchange.
The sordid details of a company run amuck that emerged after it’s assets were seized would prohibit almost any business from attempting a comeback.