FTX Bankruptcy Approved, Customers to Receive Refunds
US Judge John Dorsey on Monday ruled that former customers of the now-defunct cryptocurrency exchange FTX will be reimbursed around 119% of the money they invested in the company before it went bankrupt in 2022....
Facts
- US Judge John Dorsey on Monday ruled that former customers of the now-defunct cryptocurrency exchange FTX will be reimbursed around 119% of the money they invested in the company before it went bankrupt in 2022.[1][2]
- FTX must pay up to $16.5B in reimbursements, covering an estimated 98% of customers who held $50K or less in their accounts at the time of the bankruptcy. FTX said its goal is to pay between $14.7B and $16.5B.[3][4]
- Previously, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison after he was convicted of stealing investors' money and funneling it into sister company Alameda Research for personal business investments and political donations.[2][5]
- One advisor for FTX, which reportedly only held 0.1% of the cryptocurrency it claimed to have been holding at the time, said it would be 'exorbitantly expensive' to purchase the necessary cryptocurrencies needed to pay back customers at today's value.[3]
- FTX said it was able to obtain the agreed-upon reimbursement money by recovering some of the lost assets during the company's collapse. It also sold other assets, such as investments in other companies, including artificial intelligence firm Anthropic.[4]
Sources: [1]BBC News, [2]Wired, [3]The Straits Times, [4]CBC and [5]CNBC.
Narratives
- Narrative A, as provided by The Gentleman's Journal. In a perfect world, customers would receive compensation with full interest, but this settlement is better than nothing. By putting a good chunk of the stolen money into valuable assets, Bankman-Fried made sure FTX could make some amends by selling those holdings and paying back most of its victims at 9% interest.
- Narrative B, as provided by BanklessTimes. While something is better than nothing, and bankruptcies usually result in zero compensation, it's inaccurate to claim customers are being 100% compensated. If FTX didn't outright steal people's property and use it to fund Bankman-Fried's lavish lifestyle, many of these victims would be enjoying incredible profits right now.
