FTX Gets Court Nod to Repay Customers

FTX has officially received the green light from a bankruptcy court to start repaying its customers. The plan, approved on Monday, is set to use up to $16. 5 billion in assets that the company managed to recover after its collapse. The court praised FTX for handling the complex bankruptcy process efficiently. The plan involves paying back customers of the crypto exchange first, before settling claims from government regulators. FTX aims to repay 98% of customers who had $50,000 or less in their accounts within two months of the plan's effective date. FTX’s downfall was dramatic. Once a top crypto exchange, it crumbled when it was revealed that its founder, Sam Bankman-Fried, used customer funds to cover risky bets made by his hedge fund, Alameda Research. Bankman-Fried was sentenced to 25 years in prison for this fraud and has since appealed. FTX is still negotiating with the Justice Department over $1 billion seized during Bankman-Fried's prosecution. Shareholders might receive a portion of these funds, up to $230 million. The company estimates it will have between $14. 7 billion and $16. 5 billion to repay creditors, which is more than enough to cover 118% of the value customers had in their accounts during the bankruptcy filing in November 2022. Government agencies and a liquidator in the Bahamas have agreed to let FTX prioritize customer repayments over fines and other debts. FTX managed to recover cash and crypto assets that went missing during its chaotic collapse. They also sold off other assets, like investments in tech companies, to raise more funds. FTX's CEO, John Ray, praised the team's efforts in recovering billions of dollars and rebuilding the company's books from scratch. However, some customers are not happy with the plan, feeling they missed out on crypto price gains since the market rebounded. FTX argues that simply returning the original crypto assets is not possible because they were misappropriated by Bankman-Fried. At the time of the bankruptcy, FTX only had 0. 1% of the bitcoin its customers thought they had deposited. Buying back these assets would be extremely costly.