As per the latest reports, bankrupt crypto exchange FTX has amassed several billion dollars more than it needs to repay its customers after the FTX collapse back in November 2022.

FTX To Use Extra Cash to Repay Its 2 Million Customers

In a filing submitted on Tuesday, restructuring advisors outlined additional information regarding their plan to allocate funds to creditors and conclude the Chapter 11 proceedings. This document, known as a disclosure statement, aims to assist creditors in assessing the proposed distribution plan.

FTX said that the extra billions of dollars in its cash reserves will be used to pay interest to the company’s 2 million customers. This shall be a rare outcome since in most bankruptcy settlements, the creditors usually receive only pennies.

“In any bankruptcy, this is just an unbelievable result,” said FTX Chief Executive Officer, John Ray, who took charge after the collapse in 2022. Earlier this year in January, crypto exchange FTX announced that it has started repaying its customers.

After selling off all its assets, the company expects to have up to $16.3 billion in cash available for distribution, as per a company announcement. It has outstanding debts totaling around $11 billion owed to customers and other non-governmental creditors.

Despite fulfilling all debt obligations along with interest, court documents filed on Tuesday evening in federal court in Wilmington, Delaware, indicate that there will be no residual funds for equity holders.

At the beginning of this year, the company held approximately $6.4 billion in cash. The surge in cash reserves is primarily attributed to the widespread rise in prices of various cryptocurrencies, notably Solana, a token strongly supported by FTX founder Sam Bankman-Fried. Additionally, the company has divested numerous other assets, including stakes in various venture capital endeavors such as the artificial intelligence firm Anthropic.

The Distribution of Creditor Funds

Depending on the nature of their claim in the proceedings, certain creditors stand to recover up to 142% of their owed amounts. However, most customers are expected to receive approximately 118% of their FTX platform holdings as of the day the company filed for Chapter 11 bankruptcy.

Under the management of restructuring advisors, the company has suggested establishing a fund to compensate select creditors, including those who extended cryptocurrency loans to FTX, utilizing funds originally allocated for government regulatory purposes.

Payments are anticipated to occur several months from now as FTX progresses through the concluding phases of the bankruptcy proceedings.

The post Here’s How FTX Will Use Surplus Cash to Repay Bankruptcy Victims appeared first on CoinGape.

Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0

PRC Comment Policy

Your comments MUST BE constructive with vivid and clear suggestion relating to the post.

Your comments MUST NOT be less than 5 words.

Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.

Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.

Constructive REPLY to comments is allowed