FTX Cryptocurrency Exchange to Reimburse $11B Losses

MetaversePlanet May 9, 2024Last Updated: August 6, 2024

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FTX, a cryptocurrency exchange that went bankrupt in 2022, resulting in approximately $11 billion in losses for its customers, is now undergoing a restructuring process. The company has suggested that it could potentially reimburse those affected by liquidating all of its remaining assets, which could leave them with a substantial sum.

The cryptocurrency markets were significantly disrupted by the collapse of FTX, one of the largest global exchanges, in November 2022. The downfall was precipitated by liquidity issues and mismanagement of funds, leading swiftly to bankruptcy. Subsequently, investors suffered huge losses. Months after the collapse, FTX’s CEO, Sam Bankman-Fried, was charged with seven counts of fraud and money laundering and was sentenced to 25 years in prison.

FTX has been planning a reorganization for some time, which includes selling all their remaining assets to potentially refund their customers. However, details about the feasibility of this plan and the actual value of the assets remain unclear, despite bold claims from the company.

FTX claims that it will have as much as $16 billion when it sells all of its assets

According to the bankrupt exchange, their restructuring plans include selling remaining assets that could potentially generate up to $16.3 billion. This amount would not only cover their debts of approximately $11 billion but also leave a surplus of billions. The company claims that almost all customers will be able to recover the amounts they lost in November 2022.

FTX’s new CEO, John Ray, has indicated that he plans to refund creditors through “Chapter 11” bankruptcy proceedings, a framework for restructuring used by companies in the United States. However, it’s important to note that this plan has not yet received approval from the US bankruptcy courts.

FTX is working to raise funds and settle its debts by selling investments held by Alameda Research and FTX Ventures. Alameda Research was significantly implicated in the market’s downturn. Although this company, owned by Bankman-Fried, was presumed to be privileged and independent, it was later revealed that FTX was closely tied to its own token, FTT.