The majority of FTX creditors have voted in favor of a reorganization plan that will see over $6 billion distributed to affected investors. This marks a significant step toward compensating those impacted by the cryptocurrency exchange’s collapse in 2022.
Strong Support From Creditors
FTX received overwhelming support from its creditors, with about 94% of those in the “dotcom customer entitlement claims” class approving the plan. All 66 members of the ad hoc committee also voted in favor of it. This backing means that $6.83 billion will soon be distributed to affected traders and users. According to Kroll Restructuring Administration, nearly all creditor classes supported the proposal, and those who didn’t return their votes are assumed to be in agreement.
Given the broad approval, analysts believe the confirmation hearing scheduled for October 7 is likely just a formality. Tom Dunleavy, a crypto analyst, suggests the distribution could begin within 4 to 8 weeks, potentially concluding by the end of the year. The process will follow three “omnibus hearings” set for October 22, November 20, and December 12.
Breakdown of Creditors’ Allocation
As part of the reorganization plan, 89.1% of creditors in the “US customer entitlement claims” group will receive around $60.99 million. Meanwhile, 95.88% of creditors in the “dotcom convenience claims” class are set to receive $223.59 million. Most creditors will get a minimum of 118% of their claims, paid in cash.
However, these payouts are based on the market value of cryptocurrencies at the time the claims were filed, meaning some creditors will incur losses since the assets’ values have likely changed.
Focus on Non-Governmental Creditors
John Ray III, the CEO and Chief Restructuring Officer of FTX, emphasized that the plan aims to fully reimburse non-governmental creditors. These creditors are expected to recover 100% of their claims plus interest, while complex disputes with both governmental and private entities are being addressed.
Consequences for FTX Leaders
The fallout from the FTX collapse has led to significant legal repercussions for the company’s leadership. Caroline Ellison, former CEO of Alameda Research, was recently sentenced to two years in prison for her involvement in FTX’s downfall. Sam Bankman-Fried, the former CEO of FTX, is currently serving a 25-year prison sentence for his role in the exchange’s collapse.
