The managers of FTX, the defunct cryptocurrency exchange, have disclosed their intentions to allocate the company’s retrieved assets, which amount to around $14.5 billion to $16.3 billion, among its global creditors and clients at the time of its collapse in November 2022.
This news comes six months after Sam Bankman-Fried, the former CEO and co-founder of FTX, was found guilty on seven charges of money laundering, fraud, and conspiracy, resulting in the loss of around $8 billion in client cash. In March, Bankman-Fried was compelled to pay $11 billion in forfeiture and received a 25-year jail term.
According to a statement released on Wednesday by the company, is now being managed by a new CEO and Chief Restructuring Officer, John J. Ray III, the money to be distributed was realized from properties collected from the convicted founder, which have been converted to cash.
“FTX forecasts that the total value of property collected, converted to cash, and available for distribution will be between $14.5 and $16.3 billion.
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“This amount includes assets under the control of the chapter 11 debtors as well as assets under the control of the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, the Joint Official Liquidators of FTX Australia, the United States Department of Justice and dozens of private parties that have cooperated in the recovery efforts,” the company said in the statement.
Providing more explanations on how the money was realized, the company said it achieved the recovery level by monetizing an extraordinarily diverse collection of assets, most of which were proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.
It added that FTX.com had a massive shortfall at the time of the Chapter 11 filing in November 2022 — holding only 0.1% of the Bitcoin and only 1.2% of the Ethereum customers believed it held.
“Accordingly, the Debtors have not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases. Instead, the Debtors have had to look to other sources of recoverable value to repay creditors,” it added.
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FTX said it plans to pay in full all non-governmental creditors based on the value of their claims as determined by the Bankruptcy Court. In addition, it also plans a subordination arrangement with governmental creditors that allows payment of interest to the primary classes of customers and creditors at up to a 9% rate from the commencement of the chapter 11 cases through the date of distribution.
“There also may be the opportunity for certain creditors to receive additional payments through the Supplemental Remission Fund described in Section 1.F of the Disclosure Statement,” it added.
The collapse of FTX in 2022, once a prominent player in the cryptocurrency market, came as a blow to investors and customers who lost substantial sums of money. Prosecutors alleged that Bankman-Fried diverted funds from FTX to Alameda Research, a sister hedge fund, for personal gain, including political donations and real estate investments.
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Prosecutors detailed Bankman-Fried’s use of stolen funds to finance lavish personal expenditures, including luxury real estate acquisitions, risky investments, extravagant charitable donations, and political contributions.
After about a year of trial, Bankman-Fried was found guilty of looting $8 billion from customers of his now-bankrupt cryptocurrency exchange. A 12-member jury in Manhattan federal court convicted Bankman-Fried on all seven counts he faced after a monthlong trial.
In March this year, handed a 25-year prison sentence for his role in the collapse of the cryptocurrency exchange, culminating a high-profile case that has rocked the crypto industry.
As part of the sentencing, Judge Kaplan ordered Bankman-Fried to forfeit more than $11 billion, showing the magnitude of the financial damage caused by his actions.
