Finally, after two years of all formalities, the court judge gave the green light to the FTX bankruptcy leaders to release the funds to almost all FTX creditors.
FTX was the second-ranked top crypto exchange before Nov 2022, but it collapsed badly when a report by Coindesk media revealed that the exchange was not fully holding customers’ funds. Later, it was found that FTX co-founder Sam Bankman-Fried (SBF) misused customers’ funds for personal benefits. Now, he is in jail.
On 8 Oct 2024, Judge John Dorsey of the U.S. Delaware Bankruptcy Court approved FTX’s bankruptcy plan, finalizing the case two years after the exchange’s collapse. Under the plan, 98% of creditors will get at least 118% of their claims in cash, but the payout is based on the value at the time of bankruptcy.
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Following this news, the majority of the FTX creditors expressed happiness, but some raised objections, as the exchange decided to give compensation in USD (U.S. dollar), equal to the trade prices in Nov 2022. For example, Bitcoin was trading below the $20k price level. Reportedly, some FTX customers will receive nearly 10% to 25% of the actual funds.
Many crypto pundits with legal knowledge said that this was one of the best bankruptcy procedures for a crypto firm, with everything completed within two years. For example, the bankruptcy of Mt.Gox exchange was delayed by a decade. So, many are thankful to the FTX bankruptcy leaders, but some people still oppose the FTX bankruptcy proceedings, as they believe the rules and laws were misused to reduce the fund compensation to FTX creditors.
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