FTX reports staggering billion-dollar surplus after bankruptcy

Bankrupt cryptocurrency exchange FTX has amassed billions more than necessary to recoup losses incurred during its collapse in November 2022.

FTX CEO John Ray expressed his surprise at the milestone in comments to Bloomberg, saying the exchange has the ability to fully reimburse its more than 2 million customers. With the upcoming asset sales, FTX is expected to have about $16.3 billion in cash, exceeding the $11 billion in debt it owes customers and other nongovernmental creditors. Ray said:

This is just an incredible outcome in any bankruptcy case.

While bankruptcy victims will receive full payments plus interest, court documents show shareholders are unlikely to receive any remaining amounts. Depending on the type of claim, some creditors may recover up to 142% of what is owed. Still, most customers may receive up to 118% of their account balance when filing for bankruptcy.

FTX’s restructuring advisers recommended setting up a fund to compensate certain creditors, using funds otherwise collected by regulators. The timetable for the program is unclear, but payments are expected to be made in the coming months.

Market Reaction

Following news of the defunct exchange’s newfound wealth, the trading platform’s native token, FTX Token (FTT), surged to $2, a gain of more than 33%, according to CoinMarketCap. The cryptocurrency exchange collapsed in November 2022 after its owner and its affiliated hedge fund Alameda Research were accused of embezzlement and misappropriation of billions of dollars in customer funds.

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison and ordered to repay $11 billion. FTX’s collapse sent shockwaves through the cryptocurrency industry, with digital asset lending company Genesis filing for bankruptcy not long after causing trouble for major exchange Gemini and triggering legal action.