SUPERNEWS

Crypto

FTX to Repay Creditors Fully, Surplus Hits $16.3B Amid Crypto Rebound

FTX amasses $16.3 billion, poised to repay creditors 118%-142% post-collapse, showcasing an unprecedented financial recovery.

By Bill Bullington

ᐧ

5/7, 19:24 EDT
Bitcoin / U.S. dollar
article-main-img

Key Takeaway

  • FTX has amassed $16.3 billion, enough to pay back customers and non-governmental creditors their $11 billion in full, plus interest.
  • Creditors could receive up to 142% of their claims; most customers expected to get 118% of their pre-bankruptcy holdings.
  • The recovery is fueled by a crypto market rebound and asset sales, marking a rare positive outcome in bankruptcy cases.

FTX's Unprecedented Recovery

Cryptocurrency exchange FTX has achieved a remarkable financial turnaround, amassing billions of dollars more than necessary to fully compensate customers affected by its November 2022 collapse. This extraordinary outcome, as stated by FTX Chief Executive Officer John Ray, is nearly unheard of in the realm of US bankruptcies, where creditors often receive minimal returns. The company's assets, once liquidated, are expected to total around $16.3 billion in cash, significantly surpassing the $11 billion owed to customers and other non-governmental creditors.

Asset Sales and Crypto Surge

The resurgence in FTX's fortunes can largely be attributed to a significant rise in cryptocurrency values, including Solana, which was heavily supported by FTX's founder, Sam Bankman-Fried, now a convicted fraudster. Additionally, the sale of various assets, including venture-capital projects and a stake in the artificial-intelligence company Anthropic, has bolstered the company's cash reserves. Initially, FTX reported having about $6.4 billion in cash earlier this year, a figure that has since more than doubled due to these strategic moves.

Plan for Creditor Compensation

FTX's restructuring advisers have proposed a comprehensive plan to distribute the accumulated cash to creditors, aiming to conclude the Chapter 11 case. This plan, detailed in a disclosure statement filed in US Bankruptcy Court in Wilmington, Delaware, outlines the distribution process and is designed to facilitate creditor voting on the proposed payouts. Remarkably, some creditors could receive as much as 142% of what they are owed, with the majority expected to recover 118% of their pre-bankruptcy holdings on the FTX platform.

Management Quotes

  • John Ray, CEO of FTX:

    "In any bankruptcy, this is just an unbelievable result."