FTX Clients Could Receive $9.2 Billion Payout in Bankruptcy Settlement
FTX clients may be eligible for a substantial payout of $9.2 billion as part of the ongoing bankruptcy proceedings involving the exchange. An agreement has been reached between creditors and the new management of the platform, marking a significant milestone in resolving clients’ property disputes.
The Details of the $9.2 Billion Settlement
A court approval is required for the settlement to proceed, with an application deadline of December 16, 2023. Under the proposed plan, platform users are set to receive approximately $8.9 billion, while the American division will be allocated $166 million. These sums represent more than 90% of the exchange’s assets as of Q2 2024.
FTX CEO John Ray commented on the settlement, stating that it is a major milestone in their case and acknowledges the value created from a challenging financial situation.
FTX Recovery Plan and Asset Distribution
The new plan involves segregating FTX assets into three categories: one for FTX users, one for FTX.US clients, and a common pool for other assets. The plan excludes insiders, affiliates, and clients involved in deposit misuse or corporate fund mismanagement to ensure fair distribution.
Earlier this year, FTX estimated a deficit of funds to cover creditor claims at $8.7 billion, with about $1.6 billion in Bitcoin. However, around $7 billion in liquid assets were returned in June 2023. Legal disputes with other entities have also contributed to the ongoing proceedings and settlement negotiations.
The Background and Recent Developments
The announcement comes amid the criminal trial of FTX founder Sam Bankman-Fried, where revelations about extravagant spending within the company have emerged. Former engineering director Nishad Singh testified about expressing concerns regarding excessive lavish expenditures to Bankman-Fried.
Hot Take: FTX Clients Could Receive $9.2 Billion Payout
FTX clients may soon receive a substantial payout of $9.2 billion as part of the ongoing bankruptcy proceedings. The agreement between creditors and the new management of the platform is a significant milestone in resolving property disputes. If approved by the court, platform users can expect to receive approximately $8.9 billion, with an additional allocation for the American division. The recovery plan involves segregating assets into different categories and excludes individuals involved in deposit misuse or fund mismanagement. This settlement marks progress in resolving FTX’s financial challenges and serves as a positive outcome for affected clients.
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