Customers of the failed cryptocurrency exchange FTX are poised to recover all of the money they lost when the firm collapsed in 2022 and receive interest on top of it, the company’s bankruptcy lawyers said on Tuesday.
The announcement was a landmark in the attempt to recover the $8 billion in customer assets that disappeared when FTX imploded virtually overnight, setting off a crisis in the crypto industry. Under a plan filed in federal bankruptcy court in Delaware, virtually all FTX’s creditors, including hundreds of thousands of ordinary investors who used the exchange to buy and sell cryptocurrencies, would receive cash payments equivalent to 118 percent of the assets they had stored on FTX, the lawyers said.
Those payments would flow from a pool of assets that FTX’s lawyers have pulled together in the 17 months since the exchange collapsed, the lawyers said.
But the recoveries come with a caveat. The amount owed to customers was calculated based on the value of their holdings at the time of FTX’s bankruptcy in November 2022. That means customers won’t reap the benefits of a recent surge in the crypto market that sent the price of Bitcoin to a record high. A customer who lost one Bitcoin when FTX imploded, for example, would be entitled to less than $20,000, even though a Bitcoin is now worth more than $60,000.
It will take months for the payouts to begin. The plan must be approved by the federal judge overseeing FTX’s bankruptcy, John T. Dorsey.
Still, a major recovery of customer money seemed unlikely when FTX collapsed after a run on deposits. Before its implosion, customers used FTX as a marketplace to buy and sell digital currencies and stored billions of dollars in crypto on the platform.
