Customers of the bankrupt crypto platform FTX will receive back the money they lost in 2022 when the American company collapsed quite abruptly, with interest. The curator wrote this on Tuesday. It seemed unrealistic that FTX would reimburse its customers so generously.
FTX, a digital platform that allowed users to buy and sell cryptocurrencies such as bitcoin, was founded in 2019 by Sam Bankman-Fried (now 32). The company, based in the Bahamas, quickly grew into one of the largest crypto platforms in the world, with over a million users, and was also active in the Dutch market. The latter was without permission from the supervisor. In January 2022, FTX was worth approximately 32 billion dollars (31 billion euros at the time). The success made Bankman-Fried a billionaire. But in 2022, the crypto platform abruptly collapsed.
Bankman-Fried turned out to have secretly siphoned money from FTX customers to another of his companies, investment company Alameda. When a major crypto news site revealed the ties between FTX and Alameda, customers of the crypto exchange massively demanded their money back out of distrust. This did not work for everyone: there turned out to be a deficit of eight billion dollars. Shortly afterwards, FTX went bankrupt. It initially seemed that hundreds of thousands of people, who had wanted to benefit from the crypto boom through FTX, had lost their money.
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Creditors
But now the company’s trustees have come up with a repayment plan. It states that creditors with claims under $50,000 – 98 percent of all creditors – can receive a cash payment of 118 percent of their debt amount. In total, FTX estimates the amount to be repaid between $14.5 and $16.3 billion.
How does FTX get all those billions? Mainly by monetizing investments that FTX and Alameda had in start-ups.
A US bankruptcy court must still approve the plan. It may then take months before the creditors actually have the money in their accounts, the curator says.
For those affected, the news that they will get their money back may be a boost. But it could have been more. Due to the collapse of the stock exchange, many FTX customers were unable to benefit from the recent strong price increases on the crypto market. The curators of FTX base the repayments on the value of the crypto at the time of the bankruptcy in 2022. The value of the largest cryptocurrency, bitcoin, is now almost three times as high as it was then.
Bankman-Fried was arrested at his home in the Bahamas in 2022. Last March he was sentenced to 25 years in prison for, among other things, money laundering and defrauding customers and investors.
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