A bankrupt crypto exchange FTX customers will soon have the opportunity to vote on a significant Chapter 11 plan aimed at compensating victims and resolving government penalties following the collapse of the crypto exchange.
Judge John Dorsey has approved FTX bankruptcy advisers to begin soliciting creditor votes for this plan, marking a pivotal moment in the nearly two-year bankruptcy proceedings.
Under the proposed plan, most FTX customers could receive 119% of their assets as of November 2022, with other creditors potentially recovering up to 143%, following bankruptcy law that values claims based on the filing date, despite later crypto price increases.
FTX’s legal team, led by Andy Dietderich, emphasized the need for customer feedback through the voting process, particularly from those not involved in negotiating the repayment terms.
The firm continues to negotiate with federal authorities regarding the potential use of government claims to compensate customers, having already settled significant tax claims with the IRS.
Financially, FTX currently holds $11.4 billion, with expectations to reach $12.6 billion by October, when the Chapter 11 plan could come into effect. Dietderich noted that FTX is monetizing its assets, which were not segregated and are a mixed pool acquired with misappropriated customer funds.
Customers must submit their votes by 4 PM ET on August 16, according to court documents, with Judge Dorsey scheduled to review and potentially approve the plan on October 7.
FTX filed for bankruptcy after its founder, Sam Bankman-Fried, closed the platform in 2022 and handed over control due to fraud allegations, subsequently leading to his conviction.
This plan represents a critical step towards resolving the complex fallout from FTX’s collapse, aiming to provide restitution to affected customers and conclude regulatory obligations.