Happy tale of crypt
FTX has enough $$ to pay back customers
Fallen cryptocurrency exchange FTX has raked in billions of dollars more than it needs to fully reimburse customers who lost funds in its November 2022 collapse.
In a rare twist in US bankruptcy proceedings, FTX — whose downfall resulted in a 25-year prison sentence for its former CEO, Sam Bankman-Fried — also has enough money to cover interest, according to Bloomberg.
Once it finishes selling all of its assets, FTX will have as much as $16.3 billion in cash to distribute versus about $6.4 billion earlier this year, the company said.
The firm owes more than 2 million customers and other nongovernmental creditors about $11 billion.
“In any bankruptcy, this is just an unbelievable result,” said FTX CEO John Ray, who took over the firm after it collapsed.
Lower-ranking creditors traditionally receive just pennies on the dollar for their holdings in bankrupt companies, Bloomberg reported, but FTX has benefited from strong rallies in crypto tokens like Solana, which has been endorsed by Bankman-Fried.
Although FTX will pay its debts back in full, plus interest, there won’t be much left for equity holders, according to papers reviewed by Bloomberg that were filed Tuesday evening in federal court in Wilmington, Del., which is where the FTX case is being handled.
In bankruptcy, company owners can’t collect anything until all debts have been paid in full.
In this case, US regulators and the Internal Revenue Service have claims that are big enough to likely wipe out shareholders, Bloomberg reported.
FTX’s top equity holders include venture capital firm Sequoia Capital, private equity company Thoma Bravo, Singapore’s Temasek Holdings and the Ontario Teachers’ Pension Plan, according to a court filing last year, Bloomberg reported.
Celebrities including Tom Brady and former wife Gisele Bundchen also hold common shares.
Creditors also have missed out on a massive surge in crypto prices this year because their claims are fixed to the date FTX filed its insolvency case in 2022 under US bankruptcy rules.