On Tuesday, May 7, 2024, FTX–a now bankrupt company previously known for operating one of the leading cryptocurrency exchanges and crypto hedge funds–announced in a press release that it would be able to pay back the majority of its creditors, with interest.
FTX’s troubles began in November 2022, when crypto news site CoinDesk published a story that raised questions about the stability and sustainability of FTX and its sister trading firm Alameda Research’s financial practices and operations.
The allegations triggered an escalation in customer withdrawals, thus prompting a liquidity crisis within the company, ultimately leading to Chief Executive Officer Sam Bankman-Fried’s resignation. Subsequently, a new CEO was appointed by the court when FTX filed for Chapter 11 bankruptcy.
Then, in December 2022, Bankman-Fried was faced with both civil and criminal charges as the United States government accused the former CEO of a range of financial crimes, including fraud, conspiracy, and money laundering.
Bankman-Fried was convicted on all seven counts he was prosecuted for in November 2023 and was sentenced to 25 years in prison in March 2024.
Meanwhile, FTX has spent the intervening years selling assets and amassing as much liquidity as possible to pay back its customers.
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In total, the company has announced that the total value of assets collected will, once converted to cash, amount to somewhere between $14.5 billion and $16.3 billion.
This will be sufficient to pay back at least 118% of the allowed claims for 98% of the company’s former customers, while the remaining customers will receive 100% of their allowed claims.
