FTX clients may get a substantial payout totaling $9.2 billion by mid-2024, as part of the ongoing bankruptcy proceedings involving the exchange. This follows a statement on Tuesday revealing that an agreement had been reached between creditors and the new management of the platform, marking a significant milestone in resolving clients’ property disputes.
This pivotal agreement follows extensive deliberations, but to proceed further, court approval is required, with an application deadline of December 16, 2023. Under the proposed plan, platform users are slated to receive approximately $8.9 billion, while the American division is set to be allocated $166 million.
Notably, the new plan involves segregating FTX assets into three categories; one for FTX users, one for FTX.US clients, and a common pool for other assets. The plan will however exclude insiders, affiliates, and clients who may have been privy to the misuse of deposits and corporate funds, further ensuring a fair distribution of assets.
FTX estimated the deficit in funds to cover creditor claims at $8.7 billion, with approximately $1.6 billion in Bitcoin. However, in June 2023, the platform’s management announced the return of around $7 billion in liquid assets. Legal disputes with other entities, such as Genesis, have also shaped the ongoing proceedings, further contributing to the settlement negotiations.
Meanwhile, the latest statement comes amid the unfolding criminal trial of FTX founder Sam Bankman-Fried, where revelations about the extent of his extravagant spending have taken center stage. On Monday Nishad Singh, the former engineering director of FTX, testified that he repeatedly voiced his concerns to Bankman-Fried, characterizing the company’s expenditures as excessively lavish.