FTX Creditors Will Earn 119% Profit in Bankruptcy Settlement

Most of FTX’s creditors will profit from their investments in the failed cryptocurrency exchange.

That’s according to a bankruptcy agreement approved Monday (Oct. 7) by a federal court, giving 98% of FTX’s creditors approximately 119% of their claim.

“Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history,” FTX CEO John Ray said in a news release.

He added that FTX is at work on finalizing plans to “make distributions to creditors across more than 200 jurisdictions around the world.”

Ray became chief executive after FTX declared bankruptcy in November 2022, a collapse that rocked the crypto world and sent at least three former executives to prison. At the time of his takeover, Ray — who also helped with Enron’s post-bankruptcy recovery — blasted FTX’s previous management for a “complete failure of corporate controls.”

Since then, he and his team have worked at recovering the company’s assets. FTX says it has amassed $14.7 billion to $16.5 billion worth of property for distribution. The company has said it owes creditors around $11.2 billion.

The bankruptcy plan approved in court gives credits 119% of their claims as of November of 2022. The price of bitcoin has skyrocketed since then, which led many creditors to argue they weren’t being given a fair price for their claims.

Meanwhile, the criminal proceedings tied to FTX’s implosion continue. Last month, Caroline Ellison, the former executive who played a role in the company’s downfall but also served as star witness against FTX founder Sam Bankman-Fried, was sentenced to two years in prison.

That was a harsher sentence than the three years of supervised release, with no prison time, recommended by federal probation officials.

But Judge Lewis Kaplan — while praising Ellison’s cooperation with prosecutors — said a custodial sentence was necessary to deter others from committing fraud, calling the no-jail-time recommendation a “literal get-out-of-jail-free card I can’t agree to.”

Bankman-Fried — serving 25 years for fraud and conspiracy — has recently asked for a new trial, arguing that Kaplan had hamstrung his defense. In his filing, Bankman-Fried contends that “everyone rushed to judgment” after FTX’s implosion and that a “sentence first-verdict afterwards tsunami” prevented a fair trial.

“When the government introduces evidence, defendants have the right to rebut that evidence and present their side of the story,” the filing said. “But none of that happened here.”