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FTX has enough liquidity to repay creditors in full
Eighteen months after his collapse, FTX is ready to repay its customers in full.
The cryptocurrency exchange says it has amassed assets worth $14.5 billion and $16.3 billion, enough to repay 98% of its creditors 118% of what is owed.
The remaining 2% would recover 100% of their debt under a plan that still needs approval from a federal bankruptcy judge, the company said Tuesday evening (May 7).
“FTX achieved this level of recovery by monetizing an extraordinarily diverse set of assets, the majority of which were proprietary investments held by Alameda or FTX Ventures businesses, or lawsuits,” the company said in a press release.
Alameda refers to Alameda Research, the FTX sister company at the center of the exchange’s November 2022 implosion.
Earlier this year, consultants overseeing the company’s bankruptcy said they had no plans to resurrect the exchange.
“The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the dumpster they were simply too high“lawyer Andrew Dietderich said during a court hearing.
“Mr. Bankman-Fried” is Sam Bankman-Fried, founder and former CEO of FTX, whose leadership led to the company’s multibillion-dollar collapse and the need to repay creditors, and earned him a Sentenced to 25 years in prison on charges of fraud and criminal conspiracy.
Bankman-fried he appealed his conviction and ruling last month, arguing that the judge made errors during the trial, depriving him of his legal right to a fair trial.
Former clients have criticized the bankruptcy group decision not to attempt to revive FTX, but John J. Ray III, the company’s chief executive and chief restructuring officer, told the Wall Street Journal in March that such a plan would not be feasible.
He said his team conducted an extensive search for a buyer or partners to merge with, but never received suitable proposals.
“In any case, no serious investor was willing to give us material value when weighed against costs, delays and other factors,” Ray said. “We didn’t even get a significant offer for any intellectual property because the code was outdated and the branding was synonymous with fraud.”