In brief
- The FTX Recovery Trust has announced its third distribution to former clients of the bankrupt exchange.
- A total of $1.6 billion will be repaid to creditors this time.
- The FTX brand went bankrupt in 2022 after it was criminally mismanaged.
Creditors of collapsed crypto exchange FTX will receive $1.6 billion at the end of this month in a third distribution to make clients whole, the FTX Recovery Trust announced on Friday.
Four groups of creditors will receive the funds on September 30, with distributions ranging between 78% and 120% of the value of their FTX holdings when the exchange collapsed in November 2022, according to a press release from the Trust, which is overseeing assets and claims from the exchange’s bankruptcy estate.
The distributions mark the third phase of the FTX estate’s recovery plan, and will be paid via crypto exchanges Bitgo and Kraken, and payments platform Payoneer.
The FTX Recovery Trust first announced it would execute its distribution plan last year.
FTX allowed customers to buy, sell, and bet on the future price of major digital coins and tokens.
But FTX’s eccentric CEO, Bankman-Fried, criminally mismanaged the exchange with top associates, mainly by using customer cash to cover risky bets made by the company’s sibling hedge fund, Alameda research.
This eventually caused the company’s 2022 bankruptcy and billions of dollars in investor cash to disappear.
John J. Ray III, the highly-experienced lawyer tasked with recovering FTX customers’ missing investments, said FTX’s collapse surpassed the high-profile bankruptcy of energy company Enron in the early 2000s.
Bankman-Fried was arrested, charged and later jailed for defrauding customers.
Key members of Bankman-Fried’s inner circle testified against him during the trial. FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and FTX’s former head of engineering Nishad Singh, all said they committed crimes at Bankman-Fried’s behest.
“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history, a multi-million scheme designed to make him the king of crypto,” said Damian Williams, U.S. attorney for the Southern District of New York in remarks following the verdict.
Bankman-Fried is now serving a 25-year jail sentence in a Southern California prison for fraud and other crimes.
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