FTX crypto exchange has ample funds to compensate bankruptcy victims

Cryptocurrency exchange FTX has made headlines after amassing billions of dollars more than needed to cover what customers lost in its November 2022 collapse. This surplus has set them up to receive full recoveries, plus interest, in a rare outcome for U.S. bankruptcy proceedings.

FTX’s success in recovering funds is attributed to a strong rally in cryptocurrencies, including Solana, a token heavily backed by FTX founder Sam Bankman-Fried. The company has also sold various assets, such as a stake in the artificial intelligence company Anthropic.

The company is expected to have around US$16.3 billion in cash to distribute once all assets are sold, with debts totaling about US$11 billion. This surplus will result in full repayments to customers and other creditors, with no leftover funds for equity holders.

FTX’s major equity holders include Sequoia Capital, Thoma Bravo, Singapore’s Temasek Holdings Pte, and the Ontario Teachers Pension Plan. Notable individuals like Tom Brady and Gisele Bündchen also hold common shares in the company.

The recovery of funds has been significantly boosted by the rebound in the crypto market, with Bitcoin’s price quadrupling since late 2022. Depending on the type of claim, some creditors could recover as much as 142% of what they are owed.

Despite the positive outcome for creditors, nothing will be left for equity holders, according to court documents. The final distribution of funds is expected to take several months as FTX navigates the final stages of the bankruptcy case.