FTX cash repayment plan approved by bankruptcy judge

FTX’s bankruptcy plan to refund customers in cash plus interest has been approved by a judge in Delaware despite pressure for in-kind refunds.

Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware ruled in favor of FTX’s repayment, which could distribute up to $16 billion in recovered assets.

Two years after the crypto exchange crash, 98% of creditors were approved to receive 118% of their claims in cash. While 94% of claimants supported the plan, Sunil Kavuri, a spokesman for the largest FTX creditor community, defended cryptocurrency or in-kind refunds.

But Judge Dorsey ruled against that idea at the October 7 bankruptcy hearing. According to the court, the value of FTX’s exchange token (FTT) was essentially zero and there was no evidence of a potential price increase. Judge Dorsey closed the chapter on the 2022 saga that began with the collapse of one of the largest centralized crypto exchanges at the time.

BREAKING NEWS: 🇺🇸 Judge approved FTX’s bankruptcy plan, paving the way for repayments 👀

— Bitcoin Magazine (@BitcoinMagazine) October 7, 2024

The FTX fiasco is nearing its end

Documents showing Sam Bankman-Fried’s company misappropriated customer funds and falsified financial statements resulted in allegations of fraud from both users and US authorities.

Bankman-Fried and other FTX leaders were quickly arrested shortly after the firm filed for Chapter 11 bankruptcy protection. After a brief trial and the testimony of numerous witnesses from SBF’s inner circle, Bankman-Fried was found guilty and sentenced to 25 years in prison.

He is now seeking to appeal the decision, claiming that Federal Judge Lewis A. Kaplan cited judicial bias. Other former top executives, including Caroline Ellison, Nishad Singh and Gary Wang, took plea deals with federal prosecutors to reduce sentences. Late last month, a judge sentenced Ellison to two years in prison.

Meanwhile, bankruptcy CEO John J. Ray III consolidated the consolidated assets and recovered billions of dollars for the estate. Ray described the remnants of the SBF empire as missing standard corporate controls and systems. The idea of ​​restarting the SBF exchange was discussed last June but was ultimately abandoned as no investors supported the move with capital.