Tech
Victims of FTX crypto fraud will receive their money back, plus interest
Bankruptcy lawyers representing clients affected by dramatic collapse of cryptocurrency exchange FTX 17 months ago they say the vast majority of victims will receive their money back, plus interest.
The news comes six months after that of the co-founder and former CEO of FTX Sam Bankman Fried (SBF) was found guilty on seven counts related to fraud, conspiracy and money laundering, resulting in the loss of approximately $8 billion in client funds. SBF he was sentenced to 25 years in prison in March and ordered to pay $11 billion in forfeiture. The cryptocurrency tycoon has appealed the last month that could last years.
Renovation
After filing for bankruptcy in late 2022, SBF resigned as a U.S. attorney John J. Ray III he was named CEO and “chief restructuring officer”, tasked with overseeing the reorganization of FTX. Shortly after taking command, Ray said in testimony who, despite some of the audits previously carried out at FTX, did not trust a single piece of paper from this organization. Over the next few months, Ray and his team began tracking down the missing funds, with approximately $8 billion invested in real estate, political donations and venture capital investments, including a $500 million investment in Artificial intelligence company Anthropic before the boom of generative artificial intelligence, which the FTX estate managed to sell earlier this year for 884 million dollars.
Initially, it seemed unlikely that investors would get much, if any, of their money back, but signs in recent months have suggested that good news may be on the horizon, with progress being made in recovering liquidity through various investments made by FTX , as well as by the executives involved in the company.
We now know that 98% of FTX creditors will receive 118% of the value of their assets held in FTX in cash, while other creditors will receive 100% – plus “billions in compensation for the time value of their investments,” second to a press release issued today by FTX estate.
In total, FTX says it will be able to distribute between $14.5 billion and $16.3 billion in cash, which includes assets currently under the control of entities, including Chapter 11 debtors, liquidators, the Securities Commission of the Bahamas, the United States Department of Justice, among various other parties.
While the reorganization plan will need approval from the relevant bankruptcy court, the intention, they say, is to resolve all ongoing disputes with stakeholders and the government, “without costly and protracted litigation.”
It is worth noting here that creditors will not benefit from the Bitcoin boom that emerged from the cryptocurrency industry since FTX went bankrupt. At the time of filing for bankruptcy, FTX had a huge deficit in Bitcoin and Ethereum, far less than what customers believed it actually owned.
Therefore, the increase in value of these tokens will not be realized as part of this agreement.