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FTX has received approval from a US court for its bankruptcy plan to repay customers. The ruling will allow the fallen cryptocurrency exchange to use the $16.5 billion it managed to recover.
US Bankruptcy Judge John Dorsey praised FTX's plan as a "model case for how to deal with a very complex Chapter 11 bankruptcy proceeding."
FTX will prioritise its customers in the repayment strategy, ahead of creditors and government agencies. Customers who held $50,000 or less on the platform will receive 98% of their assets within 60 days after the plan's effective date, which is still to be determined.
Between $14.7 billion and $16.5 billion will be used to repay customers, which is enough to repay at least 118% of their account values based on FTX's estimates.
Repayment will be based on 2022 cryptocurrency values, leaving some customers disgruntled because prices have surged since then. Bitcoin has risen from $16,000 in November 2022, when the exchange collapsed, to over $63,000 today.
FTX financial adviser, Steve Coverick, testified on Monday that it would be "exorbitantly expensive" to repurchase the missing crypto to return to customers.
"Today's achievement is only possible because of the experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX's books from the ground up and from there marshaling assets from around the globe," FTX CEO John Ray said in a statement on Monday.
FTX is also still negotiating with the U.S. Department of Justice regarding $1 billion in funds seized during Sam Bankman-Fried's (SBF) prosecution, with shareholders possibly receiving a portion of those funds.
Last month, Caroline Ellison, former Alameda Research CEO and ex-girlfriend of SBF was sentenced for her role in the collapse of FTX. Ellison had faced a maximum sentence of 110 years but was only given two years in prison.
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Judge Lewis Kaplan believed that the 29-year-old was "genuinely remorseful" and that she was exploited by SBF.
