FTX Bankruptcy Plan Guarantees Full Repayment with Interest

Key Points:

• FTX creditors will receive up to 118% of their claims in cash after a Delaware judge approved the bankruptcy plan, rejecting crypto repayment options.
• Judge Dorsey ruled against in-kind repayments, noting the FTX token’s value is now essentially zero, closing the chapter on FTX’s dramatic 2022 collapse.
• FTX founder Sam Bankman-Fried was convicted of fraud and sentenced to 25 years but is appealing the ruling while other execs secured reduced sentences.

A Delaware judge has approved the FTX bankruptcy plan for cash repayment to customers, coupled with interest, in a significant step toward resolving the exchange’s protracted financial woes.

FTX Bankruptcy Plan Approved for Cash Payouts

The FTX bankruptcy plan could see up to $16 billion in recovered assets distributed to FTX creditors. Judge John Dorsey of the U.S. District of Delaware Bankruptcy Court approved it on Oct. 7.

The approval comes two years after the cryptocurrency exchange went bust, affecting thousands of customers worldwide. According to the plan, 94% of claimants had supported 98% of creditors, who are set to receive 118% of their claims in cash.

Not everyone supported the option to get some money repaid, though. Sunil Kavuri, representative of the most significant creditor community of FTX, had been pushing for in-kind repayments, particularly in cryptocurrencies. Judge Dorsey denied this plan because the value of the native token of FTX was reduced almost to zero, and there was little chance of recovery.

Read more: FTX Repayment Plan Changes Leave Creditors Feeling Scammed Twice

Sam Bankman-Fried Appeals 25-Year Sentence

The settlement effectively ends the mounting cases against FTX bankruptcy, once the leading centralized crypto exchange that imploded in 2022. It emerged that its founder, Sam Bankman-Fried, along with other executives, siphoned customer funds and prepared deceptive financial statements. In response, users and U.S. authorities levelled fraud allegations.

Within days of the Chapter 11 filing, Bankman-Fried and a handful of FTX’s top executives were arrested. In a whirlwind trial, Bankman-Fried was convicted and sentenced to 25 years in prison. He has filed an appeal citing judicial bias.