Collapsed cryptocurrency exchange FTX is set to repay customers nearly $16 billion in one of the largest bankruptcy recoveries in the crypto industry.

A Long Road to Recovery

FTX, once a dominant name in the crypto world, imploded in November 2022 amid a liquidity crisis. The company’s downfall was quick, leaving over a million customers without access to their digital assets. Former CEO Sam Bankman-Fried was charged with fraud and sentenced to 25 years in prison, leaving a financial maze for insolvency experts to navigate. Initially, the outlook for creditors was bleak. However, a recent surge in cryptocurrency prices and diligent asset recovery efforts have dramatically shifted the narrative.

$16 Billion in Customer Repayments

As of June 2024, FTX's advisers have secured $12.6 billion in assets, a figure that could rise to $16.5 billion once all remaining assets, including stakes in venture projects like AI company Anthropic, are liquidated. Despite the achievements, the repayment plan faced criticism. Customers will receive their repayments in cash rather than cryptocurrency, frustrating some who feel they’ve missed out on potential digital asset appreciation.

A Slice for Shareholders?

In an unusual twist, FTX’s preferred shareholders, typically last in line in a bankruptcy, could also see some returns. This provision depends on $1 billion in assets seized by federal prosecutors, including $626 million from the sale of Robinhood Inc. stock. However, FTX's attorneys advised that no agreement has been reached with the Justice Department concerning these funds, and shareholders might get nothing if negotiations fail.

Despite the challenges, the court's approval of the repayment plan opens the way for customers to recover their funds. With cryptocurrency prices rising, the potential to successfully close this challenging case provides hope for many.