FTX crypto fraud victims to get their money back
FTX crypto fraud victims to get their money back
Customers affected by the spectacular collapse of cryptocurrency exchange FTX 17 months ago will, according to bankruptcy attorneys representing those clients, get their money back plus interest.
The announcement was made six months after Sam Bankman-Fried (SBF), the co-founder and former CEO of FTX, was found guilty on seven counts of fraud, conspiracy, and money laundering, with around $8 billion in client monies gone.
In March, SBF was given a 25-year prison term and mandated to forfeit $11 billion. The bitcoin tycoon filed an appeal last month that might take years to process.
Restructuring
Following its declaration of bankruptcy in late 2022, SBF resigned, and U.S. attorney John J. Ray III was appointed CEO and “chief restructuring officer,” with the responsibility of managing FTX’s restructuring. He declared in court shortly after assuming leadership that he didn’t “trust a single piece of paper in this organization,” in spite of certain past audits conducted at FTX.
He and his team began investigating the missing funds in the months that followed. They discovered that about $8 billion had been invested in real estate, political contributions, and venture capital firms. Among these was a $500 million investment made in the AI startup Anthropic prior to the generative AI boom, which the FTX estate was able to sell for $884 million earlier this year.
FTX crypto fraud victims to get their money back
At first, it looked doubtful that investors would get back much, if any, of their investment. However, indications in the last few months indicated that there might be good news soon, as efforts to recover funds from FTX’s different assets and from business leaders, have progressed.
According to a press release released by the FTX estate today, we now know that 98% of FTX creditors will receive 118% of the value of their FTX-stored assets in cash, while the remaining creditors will receive 100% – plus “billions in compensation for the time worth of their investments.”
FTX claims that it will be able to distribute a total of $14.5 billion to $16.3 billion in cash, which includes assets that are currently in the hands of different parties such as liquidators, chapter 11 debtors, the United States Department of Justice, and the Securities Commission of The Bahamas.
Although the relevant bankruptcy court must approve the reorganization plan, the goal is to settle all outstanding issues with stakeholders and the government “without costly and protracted litigation,” according to their statement.
It is important to note that creditors will not profit from the recent surge in Bitcoin prices stemming from the cryptocurrency market following FTX’s collapse. When it filed for bankruptcy, FTX had significantly less Bitcoin and Ethereum than what its clients thought it possessed.
Therefore, the value increase of these tokens will not be included in this settlement.
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I’m Hassan Saeed, a Clinical Psychology graduate deeply engaged in the realms of WordPress, blogging, and technology. I enjoy merging my psychological background with the digital landscape. Let’s connect and explore these exciting intersections!
