FTX Bankruptcy: Customers Could Recover 90% of Lost Asset in 2024

Published 17/10/2023, 11:58
FTX Bankruptcy: Customers Could Recover 90% of Lost Asset in 2024

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  • The FTX bankruptcy team said it has an agreement to settle customer claims in 2024.
  • The plan will return 90% of lost assets to customers but is subject to court approval.
  • FTX will exclude customers who knew about FTX’s misuse of customer funds from recovering lost assets.

FTX Trading Ltd and affiliated debtors on Tuesday announced a proposed settlement for customer property disputes that may see customers reclaim 90% of lost assets in mid-2024. The FTX debtors said the agreement reached with creditors is a “major milestone” in their Chapter 11 case.

The FTX bankruptcy committee floated a plan that was raised by FTX last year on the brink of its collapse to settle bankruptcy claims. A notice of the proposed settlement was submitted by the FTX debtors with a Delaware-based U.S. bankruptcy court on October 16. However, the group of debtors will formally file the plan on December 16 to seek the court’s approval.

As per the filing, the amended Plan Term Sheet has divided the customer asset claims into FTX.US for customers in the United States, FTX.com for customers outside the U.S., and other general claims. The committee said the plan will address various issues while balancing the rights of customer and non-customer creditors.

For customers, the most important part of the plan is the “Shortfall Claim,” which details that customers of FTX.com and FTX.US would get 90% of assets available for distribution. The claim is estimated at $8.9 billion for FTX.com customers and $166 million for FTX.US customers.

Furthermore, the committee clarified that various factors, such as taxes, government claims, and token price fluctuation, could impact recoverable assets. Thus, customers could expect to see a lesser payout than 90%.

The plan also includes a debt settlement claim for customers with net withdrawals exceeding $250k within nine days of the bankruptcy claims. Debtors in this category have to pay back 15%, and the FTX bankruptcy would agree not to sue.

In addition, the committee said it plans to exclude customers considered “insiders, affiliates, customers” who may have known about FTX’s misuse of customer funds. That also includes customers who changed their KYC information to facilitate withdrawals when they were halted.

The committee believes the amended plan will effectively end all bankruptcy claims against the crypto exchange. However, the committee noted that significant work still needs to be done. Whether the plan works out depends on the bankruptcy court approval.

The post FTX Bankruptcy: Customers Could Recover 90% of Lost Asset in 2024 appeared first on Coin Edition.

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