FTX Creditors Set to Receive $1.6 Billion in Recovery Distribution
Creditors of the collapsed crypto exchange FTX are slated to receive $1.6 billion at the end of this month in a third distribution aimed at compensating clients, as announced by the FTX Recovery Trust on Friday.
Details of the Distribution
On September 30, four groups of creditors will receive these funds, with distributions varying from 78% to 120% of the value of their FTX holdings when the exchange went under in November 2022, according to a press release from the Trust overseeing the assets and claims of the exchange’s bankruptcy estate.
This distribution marks the third phase of FTX’s recovery plan, which will be executed through the crypto exchanges Bitgo and Kraken, along with the payments platform Payoneer.
The FTX Recovery Trust initially revealed its intent to carry out this distribution plan last year.
FTX had enabled customers to buy, sell, and speculate on the future prices of major digital coins and tokens. However, the exchange’s eccentric CEO, Sam Bankman-Fried, mismanaged the operation with his top associates, primarily by misusing customer funds to cover risky bets made by the firm’s sibling hedge fund, Alameda Research.
This mismanagement ultimately led to the company’s bankruptcy in 2022 and the disappearance of billions of dollars in investor funds.
John J. Ray III, the seasoned lawyer tasked with recovering FTX customers’ lost investments, stated that the collapse of FTX has surpassed even the infamous bankruptcy of energy firm Enron in the early 2000s.
Bankman-Fried was arrested, charged, and subsequently jailed for defrauding customers. Key figures from his inner circle, including FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and Nishad Singh, who was head of engineering at FTX, testified against him during the trial, admitting they committed crimes at the behest of Bankman-Fried.
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“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history, a multi-million scheme designed to make him the king of crypto,” remarked Damian Williams, the U.S. attorney for the Southern District of New York, following the verdict.
Currently, Bankman-Fried is serving a 25-year prison sentence in Southern California for fraud and other offenses. For further insights on crypto bankruptcy, you may refer to [EXTERNAL LINK HERE] and find related articles on FTX at [INTERNAL LINK HERE].
