- FTX needs to finalise agreements with distributors before it can begin repaying customers.
- Those repayments are expected to begin in March, the company said.
FTX expects to start repaying jilted customers in March, the bankrupt crypto exchange said Thursday.
An exact date will be shared at the end of December, after FTX has finalised agreements with companies that will help it distribute the $16.5 billion it has collected over the past two years.
“While we continue to take actions to maximise recoveries, we are full steam ahead to reach arrangements with our distribution agents and return proceeds to creditors and customers as quickly as possible,” John Ray, the executive hired to lead FTX through the bankruptcy process, said in a statement.
Repaying customers would mark the beginning of the end for one of the biggest bankruptcies — and frauds — in the history of finance.
FTX collapsed in November 2022 as customers, spurred by concern for its financial stability, withdrew assets faster than the company could honour their requests.
CEO Sam Bankman-Fried had unlawfully tapped customer deposits at FTX to cover up billions of dollars in losses at sister company Alameda Research, prosecutors would later argue.
On Wednesday, federal Judge Lewis Kaplan sentenced Gary Wang, the fifth and final FTX insider to have been charged in connection with FTX’s collapse, to three years of supervised release.
Kaplan lauded Wang’s prompt cooperation with prosecutors. Wang was one of several executives to testify against Bankman-Fried at his trial last year.
Bankman-Fried received a 25-year prison sentence, which he is appealing.
Almost all affected users will receive about 119% of the cash value of their deposits from two years ago, according to the repayment plan.
Still, some FTX customers who lost their crypto deposits when the exchange collapsed remain unhappy.
That’s because the repayment recognises the value of their crypto holdings on FTX when the exchange collapsed. Bitcoin and Ethereum traded at $20,000 and $1,200 when FTX crumbled.
Today, they’ve risen to $97,000 and $3,300, respectively.
Creditors who held Solana on FTX are even bigger losers. Solana was trading at $17 when FTX declared bankruptcy. On Thursday, it was just shy of its all-time high of $259, achieved in 2021.
But FTX couldn’t pay customers in crypto because it never had that crypto, attorney Steven Coverick, of Alvarez & Marsal, said at a hearing last month.
Distributing repayments in-kind “would mean the debtors would have to purchase that cryptocurrency on the open market in order to make in-kind distributions,” he said.
FTX “would then have to go purchase billions of dollars of cryptocurrencies in those quantities which would … result in a run-up in the market.”
Despite the controversy surrounding in-kind payments, the vast majority of creditors supported the reorganisation in a vote earlier this year, according to court documents.
Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email at aleks@dlnews.com.
