FTX To Pay Back Customers In Full, With Interest, As It Amasses Billions In Cash: 'This Is Just An Unbelievable Result,' Says CEO

FTX, the cryptocurrency exchange that filed for bankruptcy in November 2022, has accumulated a substantial cash reserve, allowing it to fully reimburse its customers.

What Happened: FTX has amassed more than enough cash to cover the losses incurred by its customers during its collapse in November 2022, reported Bloomberg.

The company, now under the leadership of CEO John Ray, is set to distribute as much as $16.3 billion in cash among its creditors, which amounts to about $5.3 billion more than what is owed.

"In any bankruptcy, this is just an unbelievable result," said Ray.

FTX’s plan includes paying interest to its 2 million customers, a rare outcome in U.S. bankruptcies where creditors typically receive only a fraction of their claims. The company’s assets, once fully sold, will leave no surplus for equity holders, according to court documents filed in Delaware, where the case is being handled.

FTX’s creditors, depending on the type of claim they hold, could recover as much as 142% of their claims. The majority of customers are expected to receive 118% of their FTX platform holdings on the day the company entered Chapter 11 bankruptcy.

See Also: Trader Who Made ‘Giga Wealth’ On Memes Reveals ‘Mememillions Playbook,’ Still Holds Most Of His DOGE

The company, now managed by restructuring advisers, has also proposed setting up a fund to compensate some creditors, including those who lent FTX crypto, with money that would have otherwise gone to government regulators.

Why It Matters: This development marks a significant turnaround for FTX, which was previously facing a dire financial situation. The company’s founder, Sam Bankman-Fried, was sentenced to 25 years for his involvement in an $8 billion fraud, and the company was forced to liquidate his $222 million worth of real estate to compensate creditors.

However, the company’s fortunes began to change when it ramped up its cash reserves in an attempt to repay customers amid bankruptcy. FTX’s affiliates, including FTX Trading Ltd. and Alameda Research LLC, significantly increased the group’s cash to $4.4 billion by the end of 2023, a substantial rise from the $2.3 billion recorded in late October. The company raised $1.8 billion through selling some digital assets as of Dec 8, according to the report.

Read Next: If You’re Getting Tired Of Crypto, Here’s Why: Mad Crypto Alpha With Ivan

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Posted In: CryptocurrencyNewsLegalGlobalMarketsbankruptcyFTXKaustubh BagalkoteSam Bankman-Fried
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