FTX bankruptcy estate plans to initiate creditor repayments by year-end
FTX claimants have received positive news regarding their reimbursements. It's been nearly two years since the collapse of the now-defunct crypto exchange FTX, leaving over nine million users with a $10 billion loss. As they wait for reimbursement, hope emerges from the FTX bankruptcy estate, indicating confidence in paying back customers.
The estate aims to start repaying customers by the end of the year, as revealed in discussions from a meeting of FTX Digital’s Joint Official Liquidators in the Bahamas. The estate is managing two processes: Chapter 11 bankruptcy in Delaware and the liquidation of FTX Digital, based in the Bahamas. Both parts of the estate collaborate to ensure creditors receive their full entitlement.
According to meeting notes, the goal is to make the first interim distribution to creditors with admitted claims and satisfactory KYC documentation by the end of 2024. Creditors could submit claims on FTX's portal since March 1, and they have until May 15 to choose a bankruptcy process and submit a claim, with an expected extension to June 2024.
FTX Bankruptcy Estate's Repayment Plan Meets Opposition From Creditors Amid Controversy Over Compensation Structure Post Crypto Price Surge
While FTX's announcement is significant, creditors find the approach hard to accept. In December 2023, the estate proposed a repayment plan based on the cash value of digital assets held on the exchange at November 11, 2022 rates. However, creditors argue this is unfair due to the surge in crypto prices since the bankruptcy date.
FTX has faced challenges in its revival efforts and its CEO, Sam Bankman-Fried, has been charged with 25 years in prison for his role in the fiasco. Creditors also allege the exchange's legal counsel participated in fraud affecting users.
FTX claimants have patiently awaited reimbursement. While the repayment announcement is welcome, the relatively unfair payout structure presents a dilemma.
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