Some customers of the failed cryptocurrency exchange FTX could receive the full value of the money they lost if a court approves the company's bankruptcy plan.
However, they will not see the gains on their holdings of bitcoin and other digital assets that have occurred over the past two years, despite massive increases in the value of those financial instruments since the FTX exchange collapsed in November 2022.
According to a news release filed Tuesday by FTX, which is going through reorganization, 98% of FTX creditors, including individual investors, who had $50,000 or less with the company will receive the funds they lost, in cash, within 60 days of a reorganization plan going into effect. The plan must still be approved by a court and by creditors.
“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors," said John J. Ray III, who took over as chief executive officer of FTX alongside his role as chief restructuring officer.
That plan is possible mostly because FTX and its sister company, Alameda Research, held a number of other assets that the reorganization team has sold off. These included shares in Anthropic, the Amazon-backed artificial intelligence startup now valued at nearly $20 billion. FTX said it had sold shares in the company worth $900 million this year.
But some claimants have objected to their crypto assets being valued at November 2022 prices as part of the bankruptcy. Since that date, the price of bitcoin has climbed more than 250%.
In February, the Justice Department appointed an independent examiner, RobertCleary, to review potential issues with parties involved in the bankruptcy, including past investigations into the FTX debtors and potential conflicts of interest in the FTX bankruptcy involving FTX’s law firm,Sullivan & Cromwell.
A spokesperson for the firm did not immediately respond to a request for comment.
Adam Moskowitz, a lawyer representing some of the FTX bankruptcy claimants, said that even with the unusually generous returns to the claimants outlined by the company, outstanding questions about the bankruptcy process remain.
"We have serious concerns," Moskowitz said.
The Sullivan and Cromwell law firm has denied any wrongdoing.
FTX acknowledged that some claimants might find the value of what's coming back to them through the bankruptcy to be insufficient.
But at the time of its collapse, the release said, FTX held "only 0.1% of theBitcoinand only 1.2% of theEthereumcustomers believed it held."
Because of that, FTX — referred to as a debtor in the bankruptcy case — has "not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases," the news release said.
"Instead, the debtors have had to look to other sources of recoverable value to repay creditors."
In March, former FTX chief Sam Bankman-Fried was sentenced to 25 years in prison for masterminding the fraud that led to the exchange's collapse.
Rob Wile
Rob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.
FAQs
FTX customers may get their money back, but not gains from crypto price increases. Some customers of the failed cryptocurrency exchange FTX could receive the full value of the money they lost if a court approves the company's bankruptcy plan.
Will FTX investors get their money back? ›
FTX now says that 98% of its creditors, including individual investors who had US$50,000 or less with FTX, will receive the funds they lost. Payments will be made in cash within 60 days of a reorganisation plan going into effect. However, this plan still needs to be approved by a US bankruptcy court and by creditors.
How is FTX paying back customers? ›
FTX has developed a structured repayment plan approved by the bankruptcy court. The plan divides assets into distinct pools: one for FTX.com customers, one for U.S. customers, and a general pool for other creditors. According to the amended plan, FTX aims to repay up to 90% of the available assets to its customers.
How much will FTX customers recover? ›
FTX customers are set to recover all funds lost, plus interest. Bankruptcy lawyers say they have collected $14.5 billion to $16.3 billion and are ready to distribute it to defrauded customers.
Can people get their money out of FTX? ›
FTX customers will get their money back and more—but the biggest winners are bankruptcy traders. Sam Bankman-Fried, the former CEO of FTX, is serving a 25-year sentence. In a rare outcome for bankruptcy, customers of the failed cryptocurrency exchange FTX will recover all of their money—and then some.
Have FTX customers been repaid? ›
FTX has committed to a bankruptcy liquidation that will repay customers whose deposits were locked during its late 2022 collapse. A United States court has ordered bankrupt cryptocurrency exchange FTX to pay $12.7bn in relief to its customers, the Commodity Futures Trading Commission has said.
Are FTX customers getting money back on Reddit? ›
Most FTX customers to get all their money back less than 2 years after collapse : r/news.
Are FTX customers being repaid in full with interest? ›
With about $16 billion in recovered funds, FTX customers can expect to be repaid 'in full, with interest.' However, there is one, major caveat: Their repayments are based on a bitcoin price of $16,871. Obviously, many victims have objected to this plan.
How do I claim back from FTX? ›
Login to the Customer Claims Portal using the same username and password you used to create your FTX account. If you opted to sign in with your Google or Apple account, login using the applicable method. FTX account: Email, SMS or Authenticator app. Click Submit.
How do I claim FTX loss? ›
It is recommended to gather the necessary records so you can provide evidence for your claim of the capital loss whenever clear confirmation is provided from regulators. Important records to substantiate the FTX loss could include: Records of the cost basis of the lost assets. all transaction records from FTX.
FTX Has Billions More Than It Needs to Repay Its More Than Two Million Customers - Bloomberg.
Will FTX customers be made whole? ›
Andrew Scurria: What FTX is projecting is that most customers, 98%, which are the retail customers, individual traders, they will get back what they had invested as of the day FTX filed for bankruptcy plus interest to compensate them for the time value of their money, the little less than two years that their crypto ...
How to recover lost money in crypto? ›
If you are a victim of a crypto scam, joining a class action lawsuit can help you recover some or all of your funds. A class action lawsuit pools together many victims who have suffered similar crypto losses. This makes it easier to hold the perpetrators accountable and seek justice.
How will FTX repay customers? ›
Since filing for bankruptcy, FTX has recovered up to $16 billion to repay customers, including about $12 billion in cash, and it says it will repay all customer claims in full, with interest.
Did FTX customers lose their money? ›
At Bankman-Fried's sentencing hearing, Kaplan agreed. He said FTX's customers had lost some $8bn and that its investors had lost $1.7bn.
Have FTX investors been made whole? ›
Ray's team now says it expects 98% of FTX creditors to receive approximately 118% of the amount of their claims. The bankruptcy managers tracked down all of FTX's crypto and other holdings and hired an investment manager to sell them.
Will FTX creditors be repaid in full? ›
All of FTX's creditors, except the government, will get 100% of their money back in cash plus interest, the bankrupt cryptocurrency exchange's estate said late Tuesday.
How will FTX pay out? ›
The CFTC agreed not to collect any payment from FTX until all its customers are repaid, with interest. The CFTC settlement requires FTX to pay $8.7 billion in restitution and $4 billion in disgorgement, which will be used to further compensate victims for losses suffered during the exchange's collapse.
Where to sell FTX claims? ›
Trade FTX Claims
Sell or buy FTX claims on Figure Markets' transparent marketplace. Our members get full visibility into market pricing through access to the complete order book. All transactions happen on crypto rails for fast and efficient settlement.
