FTX Reorganization Plan Approved, Paving the Way for $16 Billion Creditor Repayments

DELAWARE — A US Bankruptcy Judge has approved FTX’s reorganization plan, allowing the collapsed crypto exchange to move forward with $16 billion in repayments to creditors. The approval, issued by Judge John Dorsey of the District of Delaware, concludes a two-year effort to resolve claims following FTX’s collapse in November 2022.

The reorganization plan will see 98% of creditors receiving at least 118% of their claim’s value in cash, though this value is pegged to the time of FTX’s bankruptcy, which may be less than current crypto market values. Some creditors have expressed disappointment, advocating for payments in cryptocurrencies rather than cash to avoid potential tax liabilities.

Observers are speculating that these repayments could stimulate the crypto market if recipients reinvest their funds. Meanwhile, despite Dorsey’s assertion that FTX’s utility token FTT has no intrinsic value, the token has surged, recently doubling in price to around $3. This increase has led some to liken it to “meme coins” that retain speculative interest despite fundamental issues.

The approval represents the final chapter in the FTX saga, which saw former CEO Sam Bankman-Fried sentenced to 25 years in prison for fraud related to co-mingling customer funds with his hedge fund Alameda Research. Though FTX explored a potential reboot, the plans were ultimately abandoned.