When will FTX customers get their money back?
The bankruptcy and criminal proceedings relating to once-$32 billion crypto exchange FTX are almost over. Founder Sam Bankman-Fried is now imprisoned at Brooklyn Metropolitan Detention Center, serving a 25-year sentence, while fellow executives Caroline Ellison, Nishad Singh, and Gary Wang have pleaded guilty to federal crimes.
Former FTX Digital Markets CEO Ryan Salame could also enter prison as early as October 13, although he has oral arguments set for September 12 that could change that.
The financial aspect of the bankruptcy proceedings is also close to being wrapped up. With about $16 billion in recovered funds, FTX customers can expect to be repaid ‘in full, with interest.’ However, there is one, major caveat: Their repayments are based on a bitcoin price of $16,871.
Obviously, many victims have objected to this plan. Creditors blamed bankruptcy executives for “breathlessly touting what they claim to be a full recovery with interest” that is “nothing of the sort.”
Countering, the clean-up team led by John J. Ray III explained that when FTX entered bankruptcy, it actually held just 0.1% of bitcoin and 1.2% of the ether that customers saw in their balances. “We cannot pay one creditor more without taking it from another creditor,” Ray explained.
Read more: FTX estate takes another victim 19 months after bankruptcy
The big October bankruptcy plan hearing
In any case, these disagreements make an upcoming court date very important. On October 7, the US Bankruptcy Court for the District of Delaware will host an FTX bankruptcy plan confirmation hearing.
On that day, the court will consider confirmation of FTX’s proposed Chapter 11 Plan of Reorganization and its associated Disclosure Statement Plan. If the court confirms that Chapter 11 bankruptcy plan, its confirmation will allow FTX to repay over 98% of customers and unsecured creditors “in full with interest,” using a USD calculation for all crypto asset prices as of November 11, 2022.
Those repayments would likely occur after one of three further ‘omnibus hearings’ in 2024. These are catch-all discussions for consolidating the various claimants into uniform classes for repayment. Omnibus hearings on the docket are October 22, November 20, and December 12.
In summary, if the District of Delaware confirms the Chapter 11 plan on October 7, payments to victims could certainly go out before the end of the year.
If any FTX customer has not submitted a claim to the bankruptcy estate, the deadline has already passed. Customers must have submitted all of their paperwork by September 29, 2023.
Approximately 98% of customers submitted claims worth less than $50,000, and they can expect to receive approximately 118% of the USD value of their claim — again, based on November 11, 2022 crypto prices.
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