News
FTX crypto fraud victims get their money back – plus interest
Bankruptcy attorneys representing clients affected by the dramatic crash of cryptocurrency exchange FTX 17 months ago say the vast majority of victims will get their money back – plus interest.
The news comes six months after FTX co-founder and former CEO Sam Bankman-Fried (SBF) was found guilty of seven counts linked to fraud, conspiracy and money laundering, with approximately $8 billion in customer funds gone missing. SBF was sentenced to 25 years in prison in March and ordered to pay $11 billion in forfeiture. The crypto tycoon filed an appeal last month, it could last for years.
Restructuring
After filing for bankruptcy at the end of 2022, the SBF withdrew and the US attorney John J. Ray III was named CEO and “chief restructuring officer,” tasked with overseeing the reorganization of FTX. Shortly after taking over, Ray said in his testimony that despite some audits previously done at FTX, he did not “trust a single piece of paper in this organization.” In the months that followed, Ray and his team set out to track down the missing funds, with some $8 billion placed in real estate, political donations and venture capital investments, including a $500 million investment In AI company Anthropic before the generative AI boom, that the FTX domain managed to sell earlier this year for $884 million.
Initially, it seemed unlikely that investors would get much, if any, of their money back, but signs in recent months suggest that good news may be on the horizon, with progress being made in recovering liquidity through various investments made by FTX, as well as from the executives involved in the company.
We now know that 98% of FTX’s creditors will receive 118% of the value of their assets stored on FTX in cash, while other creditors will receive 100%, plus “billions in compensation for the time value of their investments.” according to to a press release issued by the FTX estate today.
In total, FTX claims to be able to distribute between $14.5 billion and $16.3 billion in cash, which includes assets currently under the control of entities including Chapter 11 Debtors, Liquidators, Commission of Bahamas Securities, the US Department of Justice, among various other parties.
Although the reorganization plan will need to be approved by the relevant bankruptcy court, the intention, they say, is to resolve all outstanding disputes with stakeholders and the government, “without costly and protracted litigation.”
It should be noted here that creditors will not benefit from the The Bitcoin boom has appeared of the crypto industry since FTX went bankrupt. At the time of its bankruptcy filing, FTX had a huge deficit in Bitcoin and Ethereum – far less than what customers thought they actually owned.
As such, appreciation of the value of these tokens will not be carried out under this settlement.