Bankrupt Crypto Exchange, FTX To Repay Creditors Full $11bn

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Indicted FTX founder Sam Bankman-Fried leaves the United States Courthouse in New York City, U.S., July 26, 2023

Bankrupt crypto exchange, FTX has announced its plans to distribute between $14.5 billion and $16.3 billion to its creditors and customers globally. This decision follows the legal fallout of the exchange’s co-founder and former CEO, Sam Bankman-Fried, who was convicted of fraud, conspiracy, and money laundering.

According to a statement released on Wednesday by the newly appointed CEO and Chief Restructuring Officer, John J. Ray III, these funds were recovered from assets formerly owned by Bankman-Fried, which have been liquidated.

The total recovery amount reflects contributions from a range of sources, including the Chapter 11 debtors, Joint Official Liquidators from various jurisdictions, and several private entities that assisted in the recovery efforts.

The collapse of FTX in November 2022, once a titan in the digital currency market, represented a significant blow to investors and customers, who suddenly found themselves grappling with substantial financial losses. Prosecutors revealed during the trial that Bankman-Fried had misappropriated funds from FTX to support personal ventures and other business interests under the guise of Alameda Research, a related hedge fund.

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READ ALSO: Binance: Regulating cryptocurrencies falls outside CBN duties, says Cardoso

 

Following a month-long trial, Bankman-Fried was convicted on all charges in a Manhattan federal court, concluding with a 25-year prison sentence handed down in March this year. He was also ordered to forfeit over $11 billion, underscoring the scale of the financial devastation caused by his actions.

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In addition to outlining the recovered amount, FTX’s statement shed light on the complex asset recovery process, which included monetizing a diverse portfolio of investments and litigation claims previously held by Alameda and FTX Ventures. However, due to the initial discrepancies in the crypto holdings reported by FTX at the time of the Chapter 11 filing, the appreciation of cryptocurrencies like Bitcoin and Ethereum could not be capitalized upon.

FTX has stated that all non-governmental creditors will be fully compensated based on the claim values determined by the Bankruptcy Court. A special arrangement will also be made for governmental creditors, which includes the accrual of interest at up to 9% from the initiation of the Chapter 11 proceedings until the funds are distributed.

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