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FTX Cryptocurrency Exchange Exceeds Recovery Expectations

(Bloomberg) — In a surprising turn of events, cryptocurrency exchange FTX has surpassed expectations by amassing billions of dollars more than necessary to cover customer losses from its November 2022 collapse. This has put customers in a position to potentially receive full recoveries along with interest, a rare occurrence in US bankruptcy cases.

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The successful recovery for FTX customers can be attributed to a strong rally in cryptocurrencies, including Solana, backed by FTX founder Sam Bankman-Fried. Additionally, the company has sold off various assets, such as a stake in the artificial intelligence company Anthropic, contributing to its financial reserve.

“In any bankruptcy, this is just an unbelievable result,” stated FTX Chief Executive Officer John Ray, who assumed leadership of the firm following its collapse.

FTX is expected to have up to $16.3 billion in cash once it completes the sale of all its assets, with debts owed to customers and non-governmental creditors totaling approximately $11 billion.

Recent bankruptcy cases in the US have seen creditors receiving full repayments, similar to the outcomes for Hertz and American Airlines Group Inc. These cases highlight the uncommon success of FTX’s recovery.

Equity Holders and Recovery Efforts

The recovery efforts for FTX have been bolstered by the recent cryptocurrency market rebound, with Bitcoin prices quadrupling since late 2022. This surge has significantly increased the potential payouts for creditors, with some expected to receive as much as 142% of their claims.

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Restructuring advisers are working to set up a fund to compensate creditors, leveraging recovered assets and untangling the company’s financial accounts. The proposed cash distributions are set to benefit a majority of customers on the FTX platform, potentially exceeding their initial holdings at the time of bankruptcy.

The upcoming vote on the proposed payout plan will play a crucial role in determining the final distribution of funds to creditors. US Bankruptcy Judge John Dorsey will review the plan and voting procedures, with a hearing scheduled for late June.

FTX’s bankruptcy filing in November 2022 marked a turning point for the company, leading to a change in management and legal proceedings. The case is being handled by the US Bankruptcy Court for the District of Delaware.

–With assistance from Lucca de Paoli.

(Adds additional details about debtholders and equity holders throughout.)

Continued Updates on FTX Recovery

Stay informed about the latest developments in FTX’s recovery process and the finalization of cash distributions to creditors.

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