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FTX's Plan: 90% Customer Fund Return

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FTX, a bankrupt cryptocurrency exchange, has introduced an amended proposal to return up to 90% of creditor holdings that were held at the exchange before it went bankrupt in November. The debtors overseeing the bankruptcy process will formally file this plan by December 16, 2023, with a U.S. Bankruptcy Court for review. FTX's collapse occurred after CoinDesk published revelations about the state of its balance sheet. The proposal outlines the division of missing customer assets into three pools based on the circumstances at the beginning of the Chapter 11 cases: assets segregated for customers, assets for FTX. US customers, and a "General Pool" of other assets.


Customers with a preference settlement amount of less than $250,000 can accept the settlement without any reduction of their claim or payment. This preference settlement is equivalent to 15% of customer withdrawals from the exchange nine days before its collapse. Creditors will also receive a "Shortfall Claim" against the general pool, representing the estimated value of missing assets at their respective exchanges, which is approximately $9 billion for and $166 million for FTX. US. However, the recoveries might be impacted by factors such as taxes, government claims, token price fluctuations, and more. Additionally, the proposal may exclude insiders, affiliates, and customers who were aware of the commingling and misuse of customer deposits and corporate funds, or those who altered their KYC information to facilitate withdrawals when they were halted. These excluded customers may not receive payouts reflecting the fair value of their claims.