FTX, the embattled crypto exchange, has gathered more funds than needed to cover creditor repayments, according to a company statement.
FTX submitted a revised Plan of Reorganization and Disclosure Statement to the bankruptcy court on May 7 as part of its ongoing case.The company has outlined a strategy to repay creditors between $14.5 billion and $16.3 billion, gathered from selling assets and merging funds from different entities. It owes approximately $11 billion to customers and other non-governmental creditors.
This amount is several billion dollars more than needed to compensate for the losses customers incurred when the exchange collapsed in November 2022, providing positive news for creditors expecting repayment.
FTX Returns to Profitability
“FTX has achieved this level of recovery by selling a wide range of assets, mainly consisting of proprietary investments from Alameda or FTX Ventures, as well as litigation claims,” the announcement said.
According to the proposed plan, 98% of FTX creditors with claims under $50,000 would receive approximately 118% of their allowed claims in cash within 60 days after plan approval.
Other non-governmental creditors would receive 100% of their allowed claims and may also receive additional interest payments of up to 9% dating back to when FTX declared bankruptcy.
FTX has also resolved significant claims from the U.S. IRS and the Commodity Futures Trading Commission (CFTC) through settlements.
The plan includes creating a fund to provide extra payments to certain creditors using recoveries that would otherwise go to regulators.Nevertheless, the payments are a few months away as the firm works on finalizing its bankruptcy case.
Cryptocurrency Recovery
A significant portion of the surplus cash can be traced back to the recovery in cryptocurrency markets, notably its substantial holdings like Solana.Since November 2022, when its price dipped below $12 due to the exchange crash, SOL prices have skyrocketed by more than 1,100%.
Currently, SOL is trading around $149 after a 4.5% drop on the day. Although SOL reached a 2024 high of $208 in mid-March, it is still down 43% from its peak price of $260 in November 2021.
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