After nearly two years of turmoil, the long-awaited approval of the FTX bankruptcy plan has finally arrived, bringing a much-needed sense of closure to creditors whose funds have been trapped since the platform’s dramatic collapse in November 2022. Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware confirmed the reorganization plan, marking a pivotal moment for those affected by the infamous exchange’s downfall.
The Path To Approval
The approval is seen as a significant victory for creditors who, as reported by CNF, had expressed dissatisfaction with receiving only 10-25% of their holdings amid lower bankruptcy filing prices. Today, FTX’s official X account announced that $6.6 billion would be distributed to creditors over the next 4 to 8 weeks. Remarkably, 94% of creditors involved in the “dotcom customer entitlement claims” have shown support for this plan, reflecting a collective sigh of relief within the affected community.
John Ray III, who took charge of FTX after its catastrophic implosion, has been instrumental in steering the bankruptcy process. Despite the approval being widely anticipated, the journey was not without its challenges. Creditors raised concerns about payment methods, with some, like representative Sunil Kavuri, advocating for cryptocurrency payouts instead of fiat currency. Ultimately, the court secured approval for payments in dollars, potentially culminating in a total payout of up to $16 billion.
A Complex Bankruptcy Case
Judge Dorsey characterized the case as one of the most intricate Chapter 11 bankruptcy proceedings he has encountered, emphasizing the complexities involved in untangling FTX’s financial web. As creditors brace for their payments, the underlying issues that led to the platform’s downfall remain stark reminders of the challenges within the cryptocurrency landscape.
The Uncertain Future of FTX
While this approval signifies a significant milestone, the future of FTX itself hangs in the balance. John Ray III had previously hinted at the possibility of restarting the exchange, and in-house lawyer Andrew Dietderich stated that efforts were made to attract potential investors. However, initial interest in reviving the defunct platform has been tepid at best. The management has yet to confirm whether plans for “FTX 2.0” will be revisited, leaving many to wonder what lies ahead for the once-thriving platform.
Also Read: FTX To Repay 98% Of Customers With $16.5B In Recovered Assets—What’s Next For Creditors?
Compounding the uncertainty surrounding FTX, founder Sam Bankman-Fried remains embroiled in a $100 million political donation scandal. He is currently appealing his 25-year prison sentence, arguing that the punishment is disproportionate. In contrast, Caroline Ellison, the former CEO of Alameda Research, accepted a two-year sentence, reflecting on the chaos that led to the firm’s demise.
The approval of the FTX bankruptcy plan marks a crucial turning point for creditors who have waited patiently for resolution. While the immediate financial outlook appears more favorable, the road ahead remains uncertain for both FTX and its leadership. As the crypto community watches closely, the next steps taken by John Ray III and his team will be pivotal in determining whether FTX can regain its footing or will remain a cautionary tale in the volatile world of cryptocurrency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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