Converted, FTX owes its creditors 10.4 billion euros. picture alliance / NurPhoto | Nikolas Kokovlis
As the crypto exchange FTX, which collapsed in 2022, announced, it will soon pay out its creditors.
The former investors will receive a total of 10.4 billion euros back. Some will pay. FTX even interest.
Meanwhile, an internal working group is examining whether to revive the platform.
Investors in the insolvent crypto exchange FTX should get their money back. The trading platform announced this in court late on Tuesday (May 7th), as the German Press Agency (DPA) now reports.
Accordingly, FTX owes its creditors around 11.2 billion US dollars, the equivalent of 10.4 billion euros. The plan stipulates that the exchange will first settle the claims of its investors. If there are still funds available afterwards, the platform plans to pay out additional interest. The interest rate for most creditors is 9 percent.
According to our own estimates, these payments amount to between 14.5 and 16.3 billion dollars, the equivalent of 13.5 to 15.2 billion euros.
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FTX pays off creditors – little consolation
This may be little consolation for investors who were trading cryptocurrencies at the time of the stock market collapse. When FTX filed for bankruptcy protection in November 2022, Bitcoin cost $16,080, around 15,000 euros. Crypto prices skyrocketed as the economy recovered.
But FTX’s assets have been sorted out over the past two years. On Tuesday, a single Bitcoin was sold for almost $62,675, or €58,400. That corresponds to a loss of 290 percent – slightly less if you take into account the accrued interest if these investors had kept the Bitcoins.
Customers and creditors with claims of $50,000 or less will receive approximately 118, according to the plan filed in the U.S. Bankruptcy Court for the District of Delaware (a state on the east coast of the United States). percent of their claims. This covers about 98 percent of FTX customers.
FTX said it was able to recover funds by monetizing a number of assets. These largely consisted of proprietary investments from Alameda or FTX Ventures or claims from legal disputes.
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Deep fall of a once promising crypto exchange
FTX was the world‘s third-largest cryptocurrency exchange when it filed for bankruptcy protection in November 2022 after experiencing the crypto equivalent of a bank run. CEO and founder Sam Bankman-Fried resigned when the stock market eventually collapsed. In March, a court sentenced him to 25 years in prison for the massive fraud at FTX.
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That was a dramatic fall from the pinnacle of success. After all, FTX ran a commercial during the legendary Super Bowl. The company featured stars such as quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.
The company named John Ray III as its new CEO. He is considered a long-time bankruptcy trustee who cleaned up the chaos after the collapse of the energy company Enron.
“We are pleased to be able to propose a Chapter Eleven plan that provides for the repayment of 100 percent of the bankruptcy claims plus interest to non-governmental creditors,” Ray said in a prepared statement.
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Will there be a comeback for FTX?
FTX technically remains a company, but its future is unclear. In early 2023, Ray said he had formed a working group to explore reviving the crypto exchange FTX.com.
Dirty details of the company came to light after the seizure of its assets. They would cripple almost any company attempting a comeback, but cryptocurrency exchanges may have different parameters.
Rival crypto exchange Binance briefly considered acquiring FTX before collapsing in late 2022. Its founder and former CEO Changpeng Zhao was sentenced to four months in prison last week. He had looked the other way as criminals used the platform to move money related to child sexual abuse, drug trafficking and terrorism.
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Binance is still the largest crypto exchange in the world. The bankruptcy court will hold a hearing on the distribution of FTX assets on June 25th.
AP/mc