FTX Creditors to Receive Over 100%… Of Their Original Investment

FTX creditors are likely to get all their money back… and then some, according to the latest reorganization plan released just yesterday.

Why it matters: This marks a big improvement from previous estimates in October, which predicted only a 90% payout. With projections estimating total cash recoveries between $14.5-16.3 billion, the full repayment of the ~$11 billion owed, plus interest, is now totally possible.

• The Numbers: Under the new plan, the defunct exchange plans to pay 98% of creditors (with claims under $50k) ~118% of their claims within 60 days. Others will receive 100%, while some may get more through a 9% “consensus rate" interest calculation.

All this goes to say, if you were a retail investor with funds stuck in FTX, there's a good chance you'll be getting your money back, with a bit of extra interest. Equity holders, on the other hand, won't receive anything as of yet.

Yes, but… not everyone is stoked. Recovered assets are still valued at November 2022 prices (~$20k BTC), so this can’t be viewed as a full recovery. While creditors’ assets have been locked up this entire time, the crypto market has recovered significantly (>$60k BTC)

What's next? The proposal is still pending final approval by the U.S. Bankruptcy Court.

Our Take

We are seeing a lot of people claiming that the process is unfair and that they aren’t being paid in full. And while we agree that, yes, the wording is odd to say the least, we have to wonder what actually is the best solution here?

• If crypto prices had stayed depressed and were actually below the claimed amount, would these same people be arguing that they should receive their cash value?