FTX crypto fraud victims to get their money back — plus interest

Bankruptcy lawyers representing clients affected by the dramatic collapse 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 related to fraud, conspiracy and money laundering, and nearly $8 billion in customers’ funds disappeared. SBF was sentenced to 25 years in prison in March and ordered to pay $11 billion in mortgages. The crypto mogul filed an appeal last month that could last for years.

Restructuring

After filing for bankruptcy in late 2022, SBF resigned and U.S. attorney John J. Ray III was brought in as CEO and “chief restructuring officer” to be tasked with overseeing FTX’s restructuring. Ray testified shortly after taking over that he “did not trust a single piece of paper in this organization” despite some previous audits at FTX. In the months that followed, Ray and his team began tracking nearly $8 billion in missing funds invested in real estate, political donations, and venture capital investments; This includes a $500 million investment in AI company Anthropic before the generative AI boom. The FTX property managed to sell for $884 million earlier this year.

Initially, it seemed unlikely that investors would get much (if any) of their money back, but signs in recent months have suggested that good news may be on the horizon, with progress being made in getting the cash back through various investments FTX has made. from managers related to the company.

We now know that 98 percent of FTX creditors will receive 118 percent of the value of their assets stored in FTX in cash, while other creditors will receive 100 percent plus “billions of dollars in compensation for the time value of their investments.” to a press release issued by the FTX property today.

In total, FTX says it could 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, the Bahamas Securities Commission and the United States Department of Justice. various other parties.

While the restructuring plan will need approval from the relevant bankruptcy court, the plan is said to be to resolve all ongoing disputes with stakeholders and the government “without costly and protracted litigation.”

The story continues

It is worth noting here that creditors will not benefit from the Bitcoin boom that has emerged in the crypto industry since the collapse of FTX. At the time of filing for bankruptcy, FTX had a large shortfall in Bitcoin and Ethereum; much less than what customers believe they actually have.

Therefore, the increase in value of these tokens will not occur as part of this agreement.