FTX customers to get all their money back plus interest

Bruised customers of the crypto exchange FTX, which collapsed in November 2022, are to get all their money back, including interest. This is the result of a new reorganization plan made public yesterday.

More precisely, customers who have less than USD 50,000 in claims against FTX at the time are to be compensated with a cash payment amounting to 118% of the value of their assets at the time. In other words, what they no longer had access to since November 8, 2022, including additional compensation of 18 percent.

However, the sum relates to the value of the assets at the time of the collapse. As a Bitcoin cost less than 20,000 US dollars at the time, the customers with BTC deposits who were cheated are still significantly worse off than if they had held their BTC themselves at the time. Today, a Bitcoin costs more than three times as much.

FTX estimates that it has 11.2 billion US dollars in debt, but will be able to repay between 14.5 and 16.3 billion US dollars. According to the press release, this should enable FTX to compensate 98 percent of its creditors.

The payments now announced are to come from a pool of assets that FTX's lawyers have collected in the 17 months following the collapse of the stock exchange. For example, the insolvency administrators sold investments such as those in the AI company Anthropic, which is also backed by Amazon, for 900 million US dollars.

FTX has achieved this recovery level by monetizing an extraordinarily diverse collection of assets, most of which were proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims. As previously disclosed, FTX.com had a massive shortfall at the time of the chapter 11 filing in November 2022 — holding only 0.1% of the Bitcoin and only 1.2% of the Ethereum customers believed it held. Accordingly, the Debtors have not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases. Instead, the Debtors have had to look to other sources of recoverable value to repay creditors.
_{From the press release}

It will be months before payouts can begin. The plan must still be approved by the federal judge overseeing FTX's bankruptcy, but then repayments are to be processed within 60 days.

When the crypto exchange founded by Sam Bankman-Fried (SBF) collapsed due to a bank run, more than 8 billion US dollars in customer assets were missing. FTX had, as it later turned out, on-lent customer deposits to the hedge fund Alameda Research, which was closely linked to the exchange. A few weeks ago, SBF, the former CEO of FTX and the co-founder of Alamada Research, was sentenced to 25 years in prison.

Even though many investors in crypto assets would probably have been better off if they had stored their coins in a hardware wallet at the time due to the strong price growth of Bitcoin and other cryptocurrencies, the prospects of an early refund are nevertheless positive news. As FTX was missing billions in customer deposits at the time of the collapse, it did not initially look as if this hole could be even remotely filled again.

Nevertheless, the case of the exchange advertised by many crypto influencers has once again impressively demonstrated that even with a supposedly well-regulated exchange, deposits are not safe. This is also the reason behind the Bitcoin and crypto community's credo "Not your keys, not your coins". Because only those who are in sole possession of the private keys to their Bitcoin can be sure that these really belong to them and that third parties are not embezzling them.

For maximum security in the self-custody process, hardware wallets with a secure element are the best solution. Blocktrainer.de can recommend the BitBox from the Swiss company of the same name.