The customers of the now-bankrupt cryptocurrency exchanges FTX and FTX.US have a glimmer of hope as they anticipate the possibility of reclaiming more than 90% of their assets. An amended proposal has been introduced with the aim of returning funds that were held by the exchange before its collapse in November of the previous year. This revised proposal will be formally submitted by the group of debtors responsible for overseeing the bankruptcy proceedings to a U.S. Bankruptcy Court by December 16, 2023.
Under the new proposal, missing customer assets will be divided into three distinct pools based on their circumstances when the Chapter 11 cases began. The first two pools are designated for assets belonging to FTX.com and FTX.US customers, respectively. Any other assets will be placed in a “General Pool”. What’s interesting is that customers with preference settlement amounts of less than $250,000 can accept the proposed settlement without any reduction in their claim or payment. This means that eligible customers, with claims below $250,000, can receive the preference settlement amounting to 15% of the withdrawals they made on the exchange within nine days before its bankruptcy, without any reduction.
While the amended proposal offers hope for customers, there are several challenges that may affect the anticipated asset recoveries. Factors such as taxation, government claims, and the fluctuation of token prices could complicate the process. These factors may impact the final amounts that customers are able to recover, potentially reducing the percentage of assets they receive. It is crucial for customers to remain aware of these challenges and carefully monitor the developments in the bankruptcy proceedings.
It’s important to note that the debtors overseeing the bankruptcy proceedings reserve the right to exclude certain individuals from the asset recovery process. Insiders, affiliates, or customers who were involved in the commingling and misuse of customer deposits and corporate funds may be excluded from reclaiming their assets. Additionally, customers who modified their KYC (Know Your Customer) information to facilitate withdrawals during the suspension may also face exclusions. These measures are put in place to maintain fairness and integrity in the asset recovery process.
In the aftermath of the high-profile collapse last year, FTX has undergone significant changes. The newly appointed CEO, John J. Ray III, has been vocal about his criticisms of the previous financial controls at the company. His leadership aims to rectify past issues and restore confidence in FTX and its operations. Meanwhile, FTX founder Sam Bankman-Fried is currently on trial for matters related to the company’s collapse. The outcome of the trial will likely have implications for the future of FTX and its customers.
The amended proposal presents a ray of hope for customers of the bankrupt cryptocurrency exchanges FTX and FTX.US. The possibility of reclaiming more than 90% of their assets, combined with the exclusion of wrongdoers, is a positive development. However, challenges such as taxation and fluctuating token prices may impact the final amounts that customers are able to recover. This highlights the importance of closely monitoring the bankruptcy proceedings and staying informed about any changes. With new leadership at FTX and ongoing legal proceedings, the future of the exchange remains uncertain. Customers must exercise caution and prepare for potential outcomes as they navigate the path towards asset recovery.