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FTX Creditors Angry Over New Payout Plan
Last Updated: September 30, 2024
✓ Fact Checked
Key Takeaways
- FTX investors might only recover 10-25% of their crypto;
- Preferred shareholders will receive payouts from a $230 million fund;
- Repayments are based on asset values at the time of FTX's bankruptcy.
Court documents suggest that FTX investors might see just 10-25% of their crypto, as announced by Sunil Kavuri, an FTX creditor activist.
The US Department of Justice plans to allocate 18% of seized assets into a "Preferred Shareholder Remission Fund," which will reimburse shareholders who held stakes before the company's collapse. This fund is capped at $230 million.
This decision has sparked outrage among FTX crypto investors, as they are now expected to receive much smaller payouts than anticipated.
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Kavuri highlighted another major sticking point: the repayments will be based on the value of assets when FTX declared bankruptcy rather than their current, much higher prices. At the time, Bitcoin (BTC) was worth approximately $16,000, compared to its current valuation of over $64,000.
FTX went bankrupt in 2022, having misappropriated customer funds for personal use and political contributions. Last month, the company settled with the United States Commodity Futures Trading Commission (CFTC), ordering it to pay $12.7 billion.
FTX leadership also faces legal consequences. Founder Sam Bankman-Fried was sentenced to 25 years in prison, while Caroline Ellison, the former CEO of FTX's sister company Alameda Research, received a two-year sentence.
As legal battles unfold and compensation plans shift, the FTX saga continues, leaving creditors and investors grappling with limited recovery options.
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