The bankrupt cryptocurrency exchange FTX has devised a plan to return up to 90% of creditor funds. The strategy was proposed as the trial of founder Sam Bankman-Fried progresses.
The group of debtors supervising the bankruptcy proceedings aims to formally submit the proposal to a U.S. Bankruptcy Court by December 16, 2023.
FTX sank last year after revelations about its balance sheet’s state were published. The firm’s new CEO, John J. Ray III, has criticized the company’s financial controls. Meanwhile, founder Bankman-Fried is currently on trial for criminal charges.
The proposed plan suggests splitting missing customer assets into three categories based on the circumstances at the commencement of the Chapter 11 cases. These groups include assets for FTX.com customers, FTX.US customers, and a “General Pool” of other assets.
Customers with a preference settlement amount of less than $250,000 can accept the settlement without any claim or payment reduction. The preference settlement equates to 15% of customer withdrawals on the exchange, nine days before it went under.
Recoveries, however, may be impacted by factors like taxes, government claims, and token price fluctuation. Moreover, the debtors could exclude insiders, affiliates, and customers from the settlement if they were aware of the misuse of customer deposits and corporate funds.
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