Update: Court documents confirm the company now has more than enough money to pay back customers. In recognition of lost profits, creditors who owe $50,000 or less will receive about 118% of the value of their deposit at the time of the Chapter 11 filing.
Surprisingly, bankruptcy lawyers say FTX clients – once thought to have lost almost everything – they are now expected to receive their money in full from the remains of the cryptocurrency company …
FTX Collapse
The FTX cryptocurrency exchange collapsed back in 2022 after it was discovered that funds clients, should have been fully protected, were illegally used for risky investments.
At the time, these investments were deeply unprofitable, destroying all assets owned by the company, and there were fears that clients would never get their money back.
FTX was declared bankrupt and former CEO Sam Bankman-Fried was found guilty of all seven criminal charges against him, including conspiracy to commit wire fraud, securities fraud, commodity fraud and money laundering. He faces up to 115 years in prison.
FTX Customers will get their money back in full
CNBC reports that prospects for former clients have since improved significantly. Overall, investments that fell in value at the time have since fully recovered, meaning funds can be returned to clients.
Lawyers representing FTX's bankruptcy estate told a judge in Delaware last week that they expect to fully pay clients and creditors their legal claims. Bankruptcy attorney Andrew Dietderich, who is working with FTX's new leadership team, said there is still “a lot of work and risk ahead” to return all the money to customers, but that the team has “a strategy to achieve this goal.”
But with a pretty big asterisk
Undoubtedly for now, for It will be a huge relief for customers to get their funds back, regardless of whether the money is returned “in full”; it's a matter of perspective.
At the time of the crash, Bitcoin was trading at around $16K, and they will recover that value. But Bitcoin's value has since risen to almost $48,000, so if their funds had remained in Bitcoin, they would have had three times as much money by now.
Bradley Chambers contributed to this report.
Image by Andre Francois Mackenzie on Unsplash.
