United States Bankruptcy Judge John Dorsey has approved a plan for defunct cryptocurrency exchange FTX to wind down its operations as part of efforts to repay users.
In an Oct. 7 hearing in the US Bankruptcy Court for the District of Delaware, Judge Dorsey approved FTX’s liquidation plan. The plan will allow the exchange’s debtors to repay 98% of users roughly 119% of their claimed account value. The court decision came roughly two years after FTX first filed for bankruptcy in November 2022, a case that resulted in criminal indictments and civil lawsuits.
“The Court’s confirmation of our Plan is a significant milestone on our pathway to distributing cash to customers and creditors,” said FTX CEO and chief restructuring officer John J. Ray III, adding:
“Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.”
Source: FTX
Not everyone is happy with the plan
Critics of the reorganization plan have pointed out that although it was intended to reimburse creditors for the assets in their FTX portfolios, this would not account for token gains between November 2022 and 2024. Sunil Kavuri, an FTX creditor who attended the bankruptcy hearing, claimed in September that users would only receive 10–25% of the value of their cryptocurrency back.
When FTX filed for bankruptcy in 2022, the price of Bitcoin (BTC) was roughly $16,000. The cryptocurrency price was more than $63,000 at the time of publication. Millions of users have been left without access to billions of dollars worth of tokens in their FTX accounts for roughly two years.
Related: FTX bankruptcy estate auctioning Worldcoin tokens this week
Some of FTX’s executives are expected to serve years in prison for their role in the exchange’s downfall. A judge sentenced former CEO Sam Bankman-Fried to 25 years following his 2023 trial and conviction. On Sept. 24, former Alameda Research CEO Caroline Ellison was sentenced to two years in prison.
It’s unclear when the debtors will begin reimbursing FTX users after Judge Dorsey’s decision. In September, false rumors circulated online about FTX claims being settled. The disbursement of billions in funds to crypto users could impact the market just as Mt. Gox repayments did in July 2024.
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