Cryptocurrency exchange FTX, which went bankrupt in November 2022, announced that almost all of its customers could get back what they lost in cash, and then some, under a newly proposed plan.
According to late Tuesday filings submitted by FTX to the U.S. Bankruptcy Court for the District Court of Delaware, FTX will have between $14.5 and $16.3 billion in cash after it sells all of its assets — more than enough to cover the $11.2 billion it owes non-government creditors.
Most (98%) of FTX’s creditors are customers with claims of $50,000 or less.
If the court approves the proposed plan, this group of two million people will receive 118% of their allowed claims in cash within 60 days.
The percentage is “100% of bankruptcy claim amounts plus interest,” per FTX CEO John Ray, who took charge after FTX collapsed. He also led Enron through bankruptcy.
“In any bankruptcy, this is just an unbelievable result,” Ray told Bloomberg.
John J. Ray III, CEO of FTX Group. Photo Credit: Tom Williams/CQ-Roll Call, Inc via Getty Images
Creditors will find out how to vote on the plan after a court hearing next month.
According to Ray, this is the first time a record-high two million customers and other creditors can claim repayment in a bankruptcy case.
Related: Who Is FTX Founder Sam Bankman-Fried and What Did He Do? Everything You Need to Know About the Disgraced Crypto King
FTX was able to raise the money to repay its debts by selling assets like its $900 million stake in AI firm Anthropic.
Though the crypto exchange will likely be able to pay back its customers, nothing will likely be left over for shareholders after government claims are considered, per Bloomberg. Under U.S. bankruptcy law, all debts must be paid before equity holders can collect.
Payments to customers will reflect the prices of cryptocurrencies in 2022, not as they are right now. Crypto prices have grown in two years, leaving some social media users disgruntled about their return on investment.
“If you had Bitcoin at the time of the collapse it was worth 16k,” one Reddit user posted. “You will compensated for 16k, not the Bitcoin which is now worth 62k. So it’s a little disingenuous.”
A Statista chart published on Wednesday confirms the estimated price of Bitcoin in November 2022 and its most recent price.
Related: Sam Bankman-Fried Sentenced to 25 Years in Prison for Multibillion-Dollar Crypto Fraud
U.S. prosecutors labeled FTX “one of the biggest financial frauds in American history” last year after customers lost $8 billion. Sam Bankman-Fried, the 32-year-old founder of FTX, was sentenced to 25 years in prison in March.
