FTX plans to give customers their money back — with one painful caveat
- FTX's lawyers said the company would pay back 98% of creditors at least 118% of what they're owed.
- The company said it would have between $14.5 and $16.3 billion available for distribution.
Lawyers for FTX said on Wednesday that the defunct crypto exchange would pay back its creditors, with interest, in a plan to take the company out of bankruptcy.
The plan, which must first be approved by a bankruptcy court, is for 98% of FTX's creditors — those who are owed $50,000 or less — to receive at least 118% of their money back within 60 days.
The lawyers said FTX would have between $14.5 and $16.3 billion available for distribution — mostly from previous Alameda and FTX Ventures investments.
In March, for example, FTX's bankruptcy estate sold a majority of its shares in the artificial-intelligence startup Anthropic for $884 million. It paid $500 million for the stake back in 2021.
But there's a brutal catch to the paybacks.
As Business Insider's Jacob Shamsian previously reported, FTX customers would be repaid based on what their cryptocurrency holdings were valued in November 2022, which is when the company went under, not what their holdings would be worth today.
Given bitcoin's recent surge, there could be a huge difference in value.
And some FTX customers aren't happy.
Bloomberg reported in January that more than 80 people had filed complaints about the plan, saying they'll be missing out on bitcoin's skyrocketing value.
The FTX founder Sam Bankman-Fried was arrested in December 2022 and convicted last fall of fraud, conspiracy, and money laundering.
The jury was not allowed to consider any bankruptcy activities in rendering its verdict, but the judge factored into his sentencing that FTX lawyers said victims would recover their losses.
Bankman-Fried is serving a 25-year prison sentence.
Correction: May 8, 2024 — An earlier version of this story misstated the month that Sam Bankman-Fried was arrested. It was December 2022, not January 2023.