FTX Seeks Customer Approval for Chapter 11 Plan to Offer 119% Asset Recovery

FTX, the failed crypto exchange, will seek customer approval for its Chapter 11 plan to compensate victims and resolve government penalties stemming from the platform's fraudulent collapse in November 2022.

Collapsed crypto exchange FTX will seek customer approval for its Chapter 11 plan, which aims to compensate victims and resolve government penalties. The move comes as part of the two-year bankruptcy proceedings, where voting by creditors plays a key role in restructuring efforts. While FTX's plan has gained support from customer committees, a vocal group remains opposed and demands substantial revisions.

According to Bloomberg, under the proposed plan, most FTX customers are expected to recover 119% of their assets as of the day the company filed for Chapter 11 in November 2022. Other creditors may receive up to 143% of their owed amounts. FTX's legal team maintains that bankruptcy law necessitates valuing claims based on their value at the time of filing, despite subsequent increases in cryptocurrency prices.

FTX decided to solicit votes from its customer base to obtain feedback from parties previously uninvolved in the repayment plan. The company is still negotiating with federal authorities and exploring options to utilize government claims against FTX to compensate affected customers. Notably, FTX has already settled a $24 **billion** tax claim from the US Internal Revenue Service. Under the settlement terms, the firm will pay the IRS $200 million within 60 days of implementing the proposed restructuring plan. The settlement allows FTX to pay a fraction of the amount claimed by the IRS, clearing the way for the exchange to distribute significant customer recoveries. The IRS will also receive a lower priority claim of $685 million, which will be paid on a subordinated basis to customers and other creditors, depending on the availability of funds.

These details were outlined in a filing made by FTX in the US Bankruptcy Court for the District of Delaware. While pursuing customer approval, FTX is also engaged in monetizing its assets. However, the platform reportedly lacked segregated digital assets directly connected to claims against the exchange. Instead, FTX possesses a collection of assets acquired using stolen customer funds, presenting a complex challenge in the compensation process.

Customers have until August 16 to vote on the Chapter 11 plan, after which Judge Dorsey will review and potentially approve the plan on October 7, considering the outcome of the customer vote. FTX's bankruptcy is closely linked to the fraud conviction of its founder, Sam Bankman-Fried (SBF). The crypto mogul is currently appealing the 25-year sentence handed down by a New York court. As of this writing, SBF's native token FTT is trading at $1.43, up 2% in the past 24 hours and just 27% year-to-date.

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