On Monday, the court approved FTX’s bankruptcy plan, enabling it to use the $16.5 billion in assets it has collected since the fall of the once-dominant cryptocurrency exchange to fully reimburse clients.
At a Wilmington, Delaware court hearing, U.S. Bankruptcy Judge John Dorsey authorized the wind-down plan, citing FTX’s achievement as “a model case for how to deal with a very complex Chapter 11 bankruptcy proceeding.”
The plan is founded on a series of settlements with FTX clients and creditors, U.S. government agencies, and liquidators appointed to wind down FTX’s activities outside the U.S.
Laptops 1000Through the agreements, FTX can use its assets to pay back its cryptocurrency exchange clients before paying any prospective rival claims made by government regulators.
After the plan’s yet-to-be-determined effective date, 98% of FTX’s customers—those who had $50,000 or less on the exchange—will receive their money back within 60 days.
Formerly regarded as one of the leading cryptocurrency exchanges globally, FTX fell apart following reports that its founder, Sam Bankman-Fried, had embezzled client funds to settle high-risk wagers made by his hedge fund, Alameda Research.
Bankman-Fried has appealed his conviction after being found guilty of stealing from FTX clients and receiving a 25-year prison sentence in March.
Regarding the $1 billion that the government took during the criminal prosecution of Bankman-Fried, FTX and the US Department of Justice are still in negotiations.
According to court filings, FTX shareholders, who would typically receive nothing in a bankruptcy procedure, could get up to $230 million from the money the DOJ seized.
