Bankrupt cryptocurrency exchange FTX has said it will be able to pay its creditors all of the $11 billion it owes, as the boom-and-bust cycle repeats itself with a sharp rise in bitcoin prices.
John Ray III, who succeeded the disgraced Sam Bankman-Fried as chief executive of FTX shortly after its collapse, said that once the exchange had sold its remaining assets, it could have more than $16 billion, well above of their debts.
“We are pleased to be in a position to propose a Chapter 11 plan that provides for the return of 100% of the bankruptcy claim amounts plus interest to non-government creditors,” the bankruptcy expert added.
The company has been helped by the fact that its debts are denominated in dollars, while many of its assets are highly speculative digital products and stakes in high-growth startups. At the time of FTX’s collapse, in November 2022, one bitcoin was worth about $20,000; now it sells for more than triple that.
Legally speaking, FTX’s creditors (many of whom are simply former users of the platform) will receive back the money they lost. However, in practical terms, they may be less than happy to have been effectively forced to sell their cryptocurrency holdings at the low prices of the time and to have lost recent gains.
FTX has also been helped by its large stake in artificial intelligence startup Anthropic, formed by a group of former OpenAI employees who resigned after differences with charismatic CEO Sam Altman. The exchange sold that stake in March of this year, for 824 million dollars.
Bankman-Fried was sentenced in March to 25 years in prison for his role in the company’s fraudulent collapse.
During the trial he attempted to argue that the expected repayment of all depositors should be a mitigating factor in his sentence. Had Ray not intervened and frozen the company’s accounts, Bankman-Fried claimed, the company would have been able to get out of the liquidity problems it was facing at the time.
Judge Lewis Kaplan “completely rejected” the claim, calling it “misleading, logically erroneous and speculative.”
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Kaplan added: “A thief who takes his loot to Las Vegas and successfully gambles away the stolen money is not entitled to a reduction in his sentence.”
The FTX plan still requires court approval before funds can be distributed to former depositors.