FTX customers are getting back all of their money PLUS interest!

So plot twist!  Failed cryptocurrency exchange FTX says it will repay all its customers in full plus a little extra.

Remember in November 2022, news started to emerge about the company’s former CEO Sam Bankman-Fried. He was allegedly promoting the exchange to investors as safe and secure, but in reality, the company was falsifying numbers and using customer funds to bankroll SBF’s other business. 

So once that news was out, all hell broke loose! FTX customers made a mad dash to pull their investments. FTX didn’t have the money to pay customers and eventually filed for bankruptcy. 

This triggered a whole crypto-winter, with Bitcoin prices falling dramatically.  Other crypto exchanges had to do mass layoffs, and some of them even went out of business. 

Late last year, SBF was found guilty of several charges including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.  He was sentenced to 25 years in prison.

So, with all of that, it kinda seemed hopeless for FTX customers, because the crypto space isn’t highly regulated and crypto customers don’t have the same protections as traditional bank customers. 

But surprise, surprise… FTX says customers are getting their money back.

The company said it has recovered between US$14 and US$16 billion worth of assets to repay customers. Now that in itself is very very rare in bankruptcy, but the new boss over at FTX, John J Ray III, isn’t playing around. 

He recovered almost US$1 billion by selling a two-thirds stake in AI company, Anthropic. A few more strategic moves and now the FTX boss says it will be able to give “non-governmental” customers, meaning regular investors, cash payments equivalent to 118% of the assets they had stored on FTX. 

So they get back the full amount they lost plus 18% more.

The only downside is that the repayment is based on the value of customers’ holdings when FTX went bankrupt in November 2022.

That means customers won’t reap the benefits of a recent surge in the crypto market. So, a customer who lost one Bitcoin when FTX imploded, for example, would be entitled to less than US$20,000 even though a Bitcoin is now worth over US$60,000.

But it’s still a win considering the customer previously wouldn’t get anything at all.

Now this isn’t a done deal. Because FTX filed for bankruptcy, the repayment plan has to be approved by the court. And the repayment process itself could take months if not years to complete.

And that’s the bottom line.