BILLION-DOLLAR PAYBACK: FTX to Unleash $11.4B to Scammed Creditors in Shocking Move
Financial recovery plan for the failed cryptocurrency platform FTX includes making payments to major creditors by May 30, 2025, using a $11.4 billion reserve fund that has been accumulated since its bankruptcy in 2022, as reported this week by Bloomberg.
Bankrupt FTX Creditors to Receive Payouts
Having sought bitcoin.com/troubled-crypto-exchange-ftx-files-for-chapter-11-bankruptcy-protection-ceo-steps-down/”>Chapter 11 protection in November 2022 amid a liquidity shortfall and fraud disclosures, the firm has reclaimed between $14.7 billion and $16.5 billion in assets—eclipsing its $11.2 billion liabilities. A judicially sanctioned restructuring blueprint guarantees creditors 119% repayment, an uncommon result in corporate failures.
Smaller claimants, owed sums below $50,000, began seeing disbursements as early as late 2024. Bloomberg illuminated these developments earlier this week, chronicling FTX’s aim to repay creditors in May 2025.
FTX’s unraveling, catalyzed by founder Sam Bankman-Fried’s misappropriation of client funds to prop up his hedge fund Alameda Research, left over 1 million creditors entangled. Bankman-Fried, convicted of fraud, received a 25-year prison term in March 2024 and was instructed to remit $11 billion in penalties.
CEO John J. Ray III, the mastermind behind Enron’s dismantling, strategically arranged for asset recovery by selling shares in tech companies, real estate holdings, and digital currencies, particularly Bitcoin, as its market value increased. The $11.4 billion fund will be used for initial payouts, and any remaining assets may be gradually sold off.
Certain creditors advocate for settlements in cryptocurrency, pointing to bitcoin’s appreciation since 2022’s valuation nadir. However, U.S. Bankruptcy Judge John Dorsey enforced cash reimbursements pegged to 2022 claim figures. Litigation-seeking crypto-denominated redress faces dim prospects.
As a researcher delving into this subject, I can affirm that this resolution now stands among the largest insolvency distributions ever documented, as it successfully compensated 98% of minor creditors within just two months following its activation. This event has sparked renewed calls for transparency and regulation in the crypto sphere, aiming to strike a balance between robust investor protections and maintaining the entrepreneurial spirit.
In October 2024, FTX’s approved repayment plan could help restore market confidence, shedding light on the risks associated with digital asset volatility and management oversight at the same time.
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2025-03-30 20:59