FTX Debtors to Return 90% of Creditor Holdings to Customers

FTX debtors have proposed a new plan that could see customers and non-customers settle their property disputes by 2024 Q2.

A man wearing white T-shirt with FTX logo on it pointing at a white cloud with crypto coins on top
  • FTX debtors have proposed a new settlement plan for customers.
  • Customers could receive up to 90% of creditor holdings.
  • The plan has a catch.

Customers of Sam Bankman-Fried’s FTX exchange and its U.S. affiliate could recoup up to 90% of distributable global value held at the company before it imploded in November 2022.

On October 16, FTX debtors announced an amended proposal termed the Customer Shortfall Settlement for settling customer property disputes in the ongoing Chapter 11 proceedings, an agreement the group anticipates submitting for consideration and approval by the Bankruptcy Court by December 16.

The Customer Shortfall Settlement

According to a notice filed with the Bankruptcy Court for the District of Delaware ahead of the anticipated official filing, FTX debtors have proposed settling customer property disputes in three pools based on the conditions at the start of the bankruptcy case.

The pools include aggregated assets for FTX.com users, assets segregated for FTX.US customers, and a “general pool” for other assets contented by class action plaintiffs.

Per the proposal, FTX.com and FTX.US customers would be entitled to a “Shortfall Claim” against the General Pool corresponding to the estimated value of assets missing at their exchange, which the debtors estimate to be about $8.9 billion for FTX.com and $166 million for FTX US.

The debtors estimate that FTX.com and FTX.US customers would receive over 90% of distributable value worldwide if the Bankruptcy Court approves the amendment plan by the end of 2024 Q2.

While this is a progressive step, according to John J. Ray III, the CEO and Chief Restructuring Officer of the FTX Debtors, who termed it “another major milestone” in the Chapter 11 case, the plan could be marred by various factors.

The Catch

According to the debtors, customers of both exchanges would not be paid in full, with FTX.com users incurring greater percentage losses. In contrast, non-customers with claims against the General Pool would incur even more significant losses than FTX.com and FTX.US customers.

Further, future recoveries by both customers and non-customers hinge on an array of variables, including fluctuations in the price of digital assets, the resolution of tax and government claims, and the price at which illiquid funds or token investments can be sold, among other factors.

Read why an FTX-linked wallet address stirred controversy earlier in the month:
FTX-Linked Wallet Moves $10 Million in Crypto Amid Legal Case

Stay updated on the Bitcoin price manipulation plot uncovered during FTX trial:
Shocking FTX Trial Unearths Bitcoin Price Manipulation Plan

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Brian Danga

Brian Danga, a Kenyan crypto reporter, is dedicated to delivering breaking news and updates from the cryptocurrency world. With a background as a Web3 writer and project manager, he recognizes the importance of unbiased reporting. Holding an LLB degree from the University of Nairobi, Brian's analytical skills contribute to his accurate news reporting. His personal interests include cooking, watching documentaries, reading, and engaging in intellectual discussions.