FTX crypto fraud victims to get their money back — plus interest

FTX victims to get refunded with interest after the company's bankruptcy and fraud.

: Bankruptcy lawyers have announced that a majority of FTX customers will receive their money back, plus interest, following the company’s collapse 17 months ago. After FTX's former CEO Sam Bankman-Fried was sentenced for fraud and money laundering, significant efforts were made to recover lost funds, resulting in a plan to pay out $14.5 to $16.3 billion to creditors. The payout includes full compensation plus interest, but won’t account for the recent rise in the value of Bitcoin and Ethereum.

In a significant turn of events for victims of the FTX cryptocurrency exchange collapse, bankruptcy lawyers representing the impacted customers have declared that the vast majority will not only receive their initial investments back but will also gain interest. This announcement comes after a tumultuous period where FTX, once a crypto empire, filed for bankruptcy 17 months ago following a fraud and money laundering scandal involving its co-founder and CEO Sam Bankman-Fried (SBF). SBF's conviction and subsequent 25-year prison sentence underscored the gravity of the malfeasance that led to approximately $8 billion in customer funds disappearing.

In the aftermath, with John J. Ray III at the helm as CEO and chief restructuring officer, FTX undertook a rigorous restructuring process. This process included divesting from various assets, including notable investments in real estate and AI companies, which collectively contributed to the recovery of a significant portion of the lost funds. Today, FTX estimates that it can distribute between $14.5 to $16.3 billion in cash to its creditors, which symbolizes a monumental step towards compensating those defrauded by the exchange. However, the distribution plan is subject to approval from the bankruptcy court, aiming to provide 98% of creditors with 118% of their lost assets in cash, with the remainder receiving full compensation plus additional recompense for the time value of their investments.

This development marks an important milestone in the crypto industry's history, highlighting the risks associated with digital assets while also showcasing the potential for recovery through legal and financial restructuring. Nevertheless, it is noted that the creditors' compensation will not reflect the potential gains from the recent surge in cryptocurrency values, specifically Bitcoin and Ethereum, due to FTX's asset shortfall at the time of its bankruptcy filing. This aspect of the settlement might leave some investors feeling shortchanged despite the overall success in recouping lost funds.

FTX bankruptcycrypto fraudasset recovery