FTX, a global exchange that faced bankruptcy, has recently secured a significant cash settlement of over $200 million from the crypto exchange Bybit. This influx of funds will contribute to the approved FTX dispersal plan, which aims to recover as much as $16.3 billion for former customers and creditors. The settlement with Bybit includes the recovery of $175 million in assets held in Bybit accounts and an agreement for Bybit to purchase the FTX debtors’ BIT tokens for approximately $53 million.
Initially, the FTX estate had sought $953 million from Bybit when it first filed a lawsuit against the crypto exchange nearly a year ago. The settlement with Bybit allows the FTX estate to recover significant value for their illiquid and volatile assets. The federal bankruptcy court approved a final plan for closing out the recovery process on October 7, estimating repayments to former FTX customers and creditors at an average of 118% of what they held when the company filed for bankruptcy in November 2022.
The liquidators of FTX had previously reached a deal with Genesis to obtain $175 million, a fraction of the original $4 billion sought. The final plan announced in May was based on the potential recovery of up to $16.3 billion in assets, aiming to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors. John Ray, the CEO of FTX’s liquidation, expressed gratitude to the customers and creditors for their patience throughout the process.
The cash payouts to creditors are expected to occur within 60 days, according to FTX. The cryptocurrency industry has seen significant price increases since the assets were locked up, with bitcoin, for example, experiencing a 304% surge. However, creditors will not benefit from these gains. Despite the high repayment percentages, creditors will not receive the gains from the surge in crypto asset prices.
FTX’s bankruptcy drama is gradually coming to a close with the recent settlement with Bybit, marking a significant step in the recovery process for former customers and creditors. The approved dispersal plan and the successful settlements with Bybit and Genesis demonstrate progress in returning funds to those affected by FTX’s collapse. The cryptocurrency industry continues to navigate challenges, but these developments offer some hope for those impacted by the FTX bankruptcy.