- The debtors’ group proposed to separate missing customer funds into three pools
- Customers with claims of less than $250,000 may not request a reduction
- The preference settlement is 15% of customer withdrawals from FTX
Collapsed crypto exchange FTX has submitted an amended proposal to return up to 90% of customer funds it held before going bankrupt last year, CoinDesk reported. The plan will be formally filed by the debtors’ group, which is monitoring the bankruptcy process. The filing will be to a US bankruptcy court and take place before December 16, 2023.
New CEO berated financial controls
FTX founder Sam Bankman-Fried is on trial on charges of fraud, among others, and the revelations just keep coming. He was replaced as CEO by John J. Ray III, who leveled sharp criticism at the exchange’s financial controls. However, the new CEO also expressed satisfaction with the terms of the settlement:
Together, starting in the most challenging financial disaster I have seen, the debtors and their creditors have created enormous value from a situation that easily could have been a near-total loss for customers.
Proposed asset segregation
The debtors’ group proposed to separate missing customer funds into three pools based on circumstances when the company filed for Chapter 11 bankruptcy: assets for customers of FTX’s US arm, assets for FTX.com customers, and all other assets in a General Pool.
Customers with claims of less than $250,000 may not request a reduction. Otherwise, the preference settlement is 15% of customer withdrawals from FTX nine days before it collapsed.
Shortfall claims
In addition, creditors would get a “Shortfall Claim” from the general pool corresponding to the prognosed value of assets missing at FTX. This value is just under $9 billion for FTX.com and $166 million for FTX.US.
The catch
The settlement underlies various factors, such as asset price fluctuation, taxes, and government claims.
In addition, the settlement might exclude customers, affiliates, and insiders who knew about the misuse and commingling of corporate funds and customer deposits. This also goes for entities who changed their KYC information to be able to keep withdrawing funds.
According to the debtors, the settlement for these customers might not correspond to the fair value of their claims.
