FTX reports a shocking billion dollar surplus after bankruptcy
FTX reports a shocking billion dollar surplus after bankruptcy
Bankrupt cryptocurrency exchange FTX has accumulated billions of dollars more than necessary to cover the losses incurred during its collapse in November 2022.
FTX CEO John Ray voiced his astonishment at the milestone in a commentary to Bloomberg, indicating the exchange’s ability to fully reimburse its over 2 million customers. With the upcoming sale of its assets, FTX is expected to have approximately $ 16.3 billion in cash, surpassing its $ 11 billion debt to customers and other non-governmental creditors. Ray said:
In any bankruptcy, this is just an unbelievable result.
While bankruptcy victims will receive full payments with interest, court documents suggest that equity holders are unlikely to receive any residual amounts. Depending on the type of claim, some creditors could potentially recover up to 142% of their owed amounts. Still, most customers may receive 118% of their account balances at the time of the bankruptcy filing.
FTX’s restructuring advisers suggested setting up a fund to compensate certain creditors, using funds that would have otherwise been collected by regulatory bodies. The timeline for this initiative is not yet clear, but payouts are expected to occur in the coming months.
Markets react
Following the news around the defunct exchange’s newfound wealth, FTX Token (FTT) — the trading platform’s native token — surged to $ 2, gaining over 33% according to CoinMarketCap data. The cryptocurrency exchange collapsed in November 2022 amid allegations of embezzlement and misappropriation of billions of dollars in customer funds involving its owners and affiliated hedge fund Alameda Research.
Sam Bankman-Fried, the founder of FTX, was sentenced to 25 years in prison and ordered to pay back $ 11 billion. FTX’s collapse sent waves through the crypto industry, with digital asset lender Genesis filing for bankruptcy shortly after causing troubles at major exchange Gemini and a legal battle.
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