Wilmington, Delaware – Amidst a landscape where creditors typically only receive a fraction of what they are owed in bankruptcy cases, the cryptocurrency exchange FTX is on track to achieve the extraordinary feat of fully repaying its customers and other non-governmental creditors after its collapse in November 2022. The company, once led by Sam Bankman-Fried, a major figure in the world of cryptocurrencies, has managed to raise billions of dollars more than the $11 billion it owes to creditors, thanks to a strong surge in the value of cryptocurrencies like Solana.
FTX’s CEO, John Ray, expressed his disbelief at the unprecedented outcome of the bankruptcy proceedings. Once all assets are sold off, FTX is expected to have a substantial cash surplus of $16.3 billion to distribute among creditors. While this promising development is rare in US bankruptcy cases, it is reminiscent of success stories like Hertz and American Airlines Group Inc., where creditors received all their owed funds.
Despite initial comparisons to high-profile fraud cases like Enron and Bernie Madoff’s Ponzi scheme, FTX’s fortunes have taken a surprising turn for the better. The company, now under new management, has outlined plans to repay all debts in full, with interest, leaving nothing for equity holders. Notable equity holders include Sequoia Capital, Thoma Bravo, and individuals like Tom Brady and Gisele Bündchen.
The substantial recoveries for creditors have been largely boosted by the rebound in the cryptocurrency market, particularly the surge in Bitcoin’s value. As a result, some creditors may potentially recover more than what they are owed, with payouts expected in the coming months as the bankruptcy case nears its conclusion. The proposal for distributing the cash surplus is currently under consideration by US Bankruptcy Judge John Dorsey, with a decision expected later in the summer.
FTX’s bankruptcy filing in 2022, which led to Bankman-Fried handing over control to insolvency experts due to fraud charges, has now evolved into a remarkable success story of financial recovery. The case, being handled in the US Bankruptcy Court for the District of Delaware, is a testament to the resilience of FTX amidst challenging circumstances.