FTX’s bankruptcy plan to repay customers in cash plus interest was approved by a Delaware judge, despite a push for in-kind reimbursements.
Judge John Dorsey of the U.S. District of Delaware Bankruptcy Court ruled in favor of FTX’s repayment, which could distribute up to $16 billion worth of recovered assets.
Two years after the crypto exchange collapsed, 98% of creditors were approved to receive 118% of their claims in cash. While 94% of claimants supported the plan, Sunil Kavuri, a spokesperson for the largest FTX creditor community, argued for cryptocurrency or in-kind repayments.
However, Judge Dorsey ruled against the idea during an Oct. 7 bankruptcy hearing. According to the court, the value of FTX’s exchange token (FTT) was essentially zero, and there was no case for potential price growth. Judge Dorsey closed the chapter on the 2022 saga, which began with the collapse of one of the largest centralized crypto exchanges at the time.
BREAKING: 🇺🇸 Judge approves FTX bankruptcy plan, clearing the path to repayments 👀
— Bitcoin Magazine (@BitcoinMagazine) October 7, 2024
FTX debacle comes to a close
Documents showing that Sam Bankman-Fried’s company misappropriated customer funds and falsified financial statements culminated in fraud allegations from users and U.S. authorities alike.
Bankman-Fried and other FTX leadership were swiftly apprehended shortly after the firm filed for Chapter 11 bankruptcy protection. Following a brief trial and multiple witness testimonies from SBF’s inner circle, Bankman-Fried was found guilty and sentenced to 25 years.
He is now attempting to appeal the ruling, claiming judicial bias from Federal Judge Lewis A. Kaplan. Other former top executives like Caroline Ellison, Nishad Singh, and Gary Wang reached plea deals with federal prosecutors for reduced sentences. A judge issued a two-year jail term to Ellison late last month.
Meanwhile, bankruptcy CEO John J. Ray III stitched together commingled assets and recovered billions for the estate. Ray described the remains of SBF’s empire as missing standard corporate controls and systems. The idea of rebooting SBF’s exchange was discussed last June but ultimately abandoned as no investors backed the pitch with capital.