Customers of the now-bankrupt cryptocurrency exchanges FTX and FTX.US are eagerly anticipating the possibility of recovering over 90% of their assets through an amended proposal. This plan aims to return funds that were held by the exchange before its collapse in November of the previous year. The group of debtors overseeing the bankruptcy proceedings will formally submit this revised proposal to a U.S. Bankruptcy Court for consideration by December 16, 2023.
Distinct Pools for Customer Assets
Under this proposal, missing customer assets will be divided into three distinct pools based on their circumstances when the Chapter 11 cases began. The first two pools are designated for assets belonging to FTX.com and FTX.US customers, respectively. A “General Pool” will hold other assets.
Notably, customers with preference settlement amounts of less than $250,000 can accept the proposed settlement without any reduction in their claim or payment. The preference settlement, equivalent to 15% of customer withdrawals made on the exchange within nine days before its bankruptcy, will be available without reduction for eligible customers whose claims are less than $250,000.
“The anticipated asset recoveries may face challenges due to factors like taxation, government claims, and the fluctuation of token prices,” warns a representative of the debtors overseeing the proceedings.
The debtors have outlined that insiders, affiliates, or customers who were involved in the commingling and misuse of customer deposits and corporate funds will be excluded from the asset recoveries. Furthermore, customers who modified their KYC information to facilitate withdrawals during the suspension will also be excluded.
A Ray of Hope for FTX and FTX.US Customers
FTX, which suffered a high-profile collapse last year after revelations concerning its financial state, has been undergoing significant changes. The newly appointed CEO, John J. Ray III, has criticized the previous financial controls at the company. Meanwhile, FTX founder Sam Bankman-Fried is currently on trial for matters related to the collapse.
This new proposal brings a ray of hope for FTX and FTX.US customers who have been eagerly waiting for the return of their assets. If approved, this plan expects to disburse an estimated $9 billion for FTX.com and $166 million for FTX.US by the end of the second quarter in 2024.
“I am optimistic about the revised proposal, and I hope that it will provide some relief to our loyal customers,” says John J. Ray III, the newly appointed CEO of FTX.
