In a rare outcome for bankruptcy, customers of the failed cryptocurrency exchange FTX will recover all of their money—and then some. Those who lost money when the exchange collapsed in November 2022 are owed around $11 billion, but the estate been able to recover as much as $16.3 billion, court records filed on Tuesday show. As a result, claims will be repaid with interest.
John Ray, FTX’s CEO who replaced Sam Bankman-Fried, who is currently serving a 25-year prison sentence, has been in charge of cobbling together the estate’s assets. “John and the team absolutely crushed it,” Thomas Braziel, a broker at 117 Partners who buys FTX claims on behalf of some of the largest hedge funds in the market, told Fortune.
The exact value customers will be repaid depends on the type of claim they filed. While some could recover as much as 142% of what they held, the vast majority are likely to receive 118%. The specific pay day is estimated to be months away.
While the gains are unusual and impressive, the biggest winners in the FTX affair are those who trade bankruptcy claims. After the exchange collapsed in late 2022, a handful of hedge funds and individual investors moved quickly, and began buying up claims for a few cents on the dollar before the exchange even officially filed for bankruptcy. Data from Claims Market, an online brokerage platform that has facilitated the trade of over 500 claims, shows that the bid price of claims has risen from 10% to 101% as of Wednesday.
Chapter 11 filings, as of March 20, show the buyers set to make the largest returns from FTX scraps are hedge funds specializing in distressed debt. Attestor, Baupost, and Farallon, which had each bought claims worth over $520 million, $518 million, and $346 million, respectively, are leading the race. The funds have used alternative entity names confirmed by people close to the matter.
Louis d’Origny, founder of claims buying platform FTX Creditor, who bet his personal funds on a full recovery, and set to profit over $25 million.He says he’s “incredibly, pleasantly surprised” with the announcement. Ray has sold “everything that wasn’t nailed down to the floor,” he said.
The lucrative recovery is partially due to the crypto market’s renewal since 2022, with Bitcoin up over 190% since the exchange went bust. As a result, the company’s crypto assets have appreciated in value. Likewise, FTX’s shares in the AI startup Anthropic have also appreciated in value, and were sold for more than $880 million. In addition, FTX has 38 properties in the Bahamas, and recovered $2.6 billion in cash, according to data in a presentation filed as part of its case.
But not every claimant is happy with the results, with some investors arguing that the present day value of their crypto tokens should be honored. ArushSehgal, an investor who had $4 million on the platform, and previous member of theFTXunsecuredcreditors’ committee, told Fortune that Ray would have sold the estate’s at “market bottom prices” in September 2023 had it not been for the UCC’s intervention. “The damage done to the estate assets by John Ray has now exceeded Bankman-Fried’s original crime,” he argues.
Last month, Bloomberg reported that the FTX estate sold about two-thirds of its $2.6 billion in Solana tokens in a deeply discounted deal. The bankruptcy administrators overseeing FTX’s estate sold SOL at $64 per token, sources close to the matter told Bloomberg, raising up to $1.9 billion for the estate. The token, however, is trading at around $148 at the time of publication.
These deals have outraged some victims, including Sunil Kavuri, who criticized Bankman-Fried’s “continuous lie that we will all be made full” at his sentencing.
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FAQs
FTX customers will get their money back and more—but the biggest winners are bankruptcy traders. Sam Bankman-Fried, the former CEO of FTX, is serving a 25-year sentence. In a rare outcome for bankruptcy, customers of the failed cryptocurrency exchange FTX will recover all of their money—and then some.
Will FTX customers get all their money back? ›
FTX says it will return money to most of its customers : NPR. FTX says it will return money to most of its customers FTX says that nearly all of its customers will receive the money back that they are owed, two years after the cryptocurrency exchange imploded, and some will get more than that.
Did FTX investors get their money? ›
What about FTX customers? FTX now says that 98% of its creditors, including individual investors who had US$50,000 or less with FTX, will receive the funds they lost. Payments will be made in cash within 60 days of a reorganisation plan going into effect.
Is FTX going to pay back? ›
Since its bankruptcy filing in 2022, FTX's new management has been able to recover $16 billion to pay back customers, and has said it plans to repay them in full. At a hearing Tuesday, the company will ask U.S. Bankruptcy Judge John Dorsey to sign off on open voting on the company's wind-down plan.
Will FTX creditors be repaid in full? ›
While FTX said it expects to collect enough cash to pay them 100% of what they're owed, plus interest, there's a catch. They're not getting their crypto back. Instead, they're getting US dollars based on what the accounts were worth when FTX went bust in November 2022.
Are customers poised to recover FTX? ›
Customers of the failed cryptocurrency exchange FTX are poised to recover all of the money they lost when the firm collapsed in 2022 and receive interest on top of it, the company's bankruptcy lawyers said on Tuesday.
How do I claim back from FTX? ›
The Customer Claims Portal will remain available to use for customers after the bar date.
- The Welcome Page.
- Step 1: Login.
- Step 2: Email Verification.
- Step 3: Providing Know Your Customer Information.
- Step 4: Review Account Balances.
- Step 5: Submission of Electronic Proof of Claim.
- Step 6: Standby for Next Steps.
That is not the whole story: FTX has also recovered money by selling off businesses, by selling some of its venture capital portfolio,3 by seizing real estate and Robinhood Markets Inc. stock that Bankman-Fried and other had bought, by clawing back donations and investments.
How much does FTX owe customers? ›
FTX estimates that it owes creditors around $11.2 billion. FTX said that it has between $14.5 billion and $16.3 billion to distribute to creditors. Customers whose claims amount to $50,000 or less will receive approximately 118% of the amount of their allowed claim, the plan says.
Will FTX plans to repay nearly all creditors in full after recovering assets? ›
L ast month, lawyers overseeing FTX's bankruptcy filed a reorganization plan that would not only repay nearly all of the failed cryptocurrency exchange's customers in full but give them 18% interest for the period in which their investments were tied up.
Through pooling, you have the opportunity to sell your claim and have a more favorable rate. Our team can help navigate you through this process.
Did FTX have debt? ›
Collapsed cryptocurrency exchange FTX says it has billions of dollars more than it needs to repay customers. The firm says that once it has sold off its remaining assets it will have as much as $16.3bn (£13bn) to cover the debts, which stand at around $11bn.
How much is FTX worth? ›
The live price of FTX Token is $ 1.407333 per (FTT / USD) with a current market cap of $ 462.86M USD. 24-hour trading volume is $ 12.53M USD.
Will FTX customers ever get their money back? ›
Nearly all customers of FTX will get their money back, plus interest, after the cryptocurrency exchange imploded 17 months ago. FTX, which filed for bankruptcy protection in November 2022, said in a court filing Tuesday that between $14.5 billion and $16.3 billion would be available for distribution.
Can you write off FTX loss? ›
Generally, where you can recover an item it is not lost, which may delay the process until more details of the FTX events are determined. In the US if your crypto funds become totally worthless and irrecoverable, you may be eligible to write them off as a nonbusiness bad debt on your taxes.”
What is the settlement for the FTX claim? ›
As a result, FTX and the IRS have agreed that the IRS will accept $885 million. Of that, $200 million would be treated as a priority claim—only 2.5% of the original IRS priority claims—and be payable by wire within 60 days of the settlement's effective date.
Does FTX plan to pay billions more to creditors for compensation? ›
The vast majority of FTX customers will likely get 119% of what they had on the platform the day the company filed Chapter 11 in November 2022. Other creditors could recover as much as 143% of what they're owed, according to court documents.
Has FTX made billions? ›
Since filing for bankruptcy, FTX has recovered up to $16 billion to repay customers, including about $12 billion in cash, and it says it will repay all customer claims in full, with interest.
