FTX has unveiled its latest proposal aimed at compensating victims of the 2022 crash, now pledging to reimburse all creditor claims in addition to offering "billions of dollars in compensation for the time value of investments." However, skepticism remains among some experts regarding the adequacy of this offer.
The bankrupt cryptocurrency exchange announced the plan in a statement on May 7, emphasizing that it is still subject to finalization and approval by the U.S. Bankruptcy Court for the District of Delaware. Under the proposal, only creditors with claims totaling less than $50,000 are eligible for a 118% recovery, a measure expected to cover approximately 98% of FTX's creditors by volume.
Despite the promise of significant compensation, FTX's plan falls short for some creditors as it still bases repayments on the value of its assets at the time of bankruptcy in November 2022, rather than at current market prices. Since then, the cryptocurrency market has witnessed a substantial recovery, with Bitcoin surging by almost 280%.
John J. Ray III, FTX's CEO and chief restructuring officer, expressed satisfaction with the proposed Chapter 11 plan, highlighting its provision for returning 100% of the bankruptcy claim amount plus interest to non-governmental creditors. FTX estimates that the total value distributed to creditors will range between $1.45 billion and $16.3 billion, with repayments slated to occur within 60 days of the plan's effective date.
Nevertheless, discontent lingers among industry experts who argue that the proposal fails to adequately address the issue of stolen funds, which creditors believe should be reimbursed based on current market prices. The collapse of the $32 billion cryptocurrency exchange in November 2022 exposed an $8 billion deficit, prompting subsequent efforts by new management to mitigate losses.
Among these efforts was the sale of a majority stake in artificial intelligence firm Anthropic for $884 million in March, representing the bulk of FTX's holdings in the company. In January, FTX confirmed that its restructuring plan would not involve relaunching the cryptocurrency exchange, which had previously ranked among the largest platforms by trading volume prior to its downfall.
