Source: Adobe / Александр Поташев
Now-defunct crypto exchange FTX has revealed its latest proposal aimed at returning billions of dollars to customers and creditors, marking the start of the final stage in resolving its bankruptcy case.
While the proposal addresses several critical aspects, there are still unanswered questions that remain, such as whether FTX will revive its defunct crypto exchange, the methodology for valuing certain digital tokens, and the anticipated returns for creditors, Bloomberg reported Monday.
The plan is scheduled to be presented to creditors for a vote next year, with the likelihood of incorporating additional key details, before it ultimately undergoes final approval from US Bankruptcy Judge John Dorsey.
It is important to note that the primary creditor and customer groups involved in the Chapter 11 case have already reached a consensus on the broad framework of the plan.
FTX to Distribute Billions in Dollars in Cash
Under the proposed payout plan, billions of dollars will be distributed in the form of cash following the liquidation of a substantial portion of the firm’s cryptocurrencies.
As reported, in a recent court filing at the United States Bankruptcy Court for the District of Delaware, the debtors proposed that any customer claim seeking compensation from the exchange should be based on the asset’s value as of November 11, 2022.
According to the plan, the value of each claim will be determined by converting the crypto assets into cash using conversion rates specified in a conversion table.
Cryptocurrency prices have risen significantly since the bankruptcy filing.
Bitcoin, for example, was valued at $17,036 during the filing but has since surged to $42,272 at the time of publication.
Bankman-Fried Found Guilty
Last month, FTX founder Sam Bankman-Fried was found guilty of orchestrating an extensive fraud scheme that led to the collapse of the FTX exchange.
A tentative sentencing date of March 28, 2024, has been set, with legal experts suggesting a potential prison term of 15-20 years, despite a theoretical maximum of 115 years.
Following the company’s bankruptcy filing last year, Bankman-Fried relinquished control of his empire to restructuring professionals.
Since then, the advisors have worked to locate assets and navigate the intricate web of debts owed to various creditors, including customers who had invested cash and cryptocurrencies with the trading platform.
Meanwhile, Caroline Ellison, CEO of Alameda Research, Gary Wang, co-founder of FTX, and Nishad Singh, FTX engineering chief, are likely to receive little to no prison time for their cooperation, according to legal experts.
All three admitted to participating in fraudulent activities under Bankman-Fried’s direction, involving the transfer of billions of dollars in FTX customer funds to Alameda, a hedge fund mostly owned by Bankman-Fried.
However, they may still face other consequences. The government could demand the return of ill-gotten gains and order restitution payments to victims.
Given the government’s claim that FTX customers suffered losses in the billions, the financial burden on the three witnesses could be substantial.
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