FTX, once one of the biggest cryptocurrency exchanges in the world, has announced plans to repay its customers and creditors with interest. The exchange, previously headed by convicted fraudster Sam Bankman Fried, went bankrupt in November 2022, causing an estimated one million customers to lose their funds.
According to the company, it has recouped enough funds to repay all customers and creditors. If approved by a US bankruptcy court, those who held cryptocurrency, such as Bitcoin, with FTX will be able to receive their funds back. They may also receive up to 9% in interest. The total amount available for distribution is between $14.5 billion and $16.3 billion, which includes the value of property that has been collected and converted to cash. FTX’s debts, however, only amount to $11 billion.
FTX has been able to monetize a diverse array of assets, most of which were investments made by FTX or its investment company Alameda Research. As a result, 98% of creditors, those owed $50,000 or less by FTX, will receive 118% of the amount due within 60 days of the proposed plan going into effect.
The downfall of FTX was largely attributed to the actions of Mr. Bankman Fried, who was found guilty of lying to investors and stealing billions of customer funds for personal use, including political donations and a lavish lifestyle in the Bahamas. He was sentenced to 25 years in jail in March.
At the time of its collapse, FTX held only 0.1% of Bitcoin and 1.2% of Ethereum, despite customers believing it had a larger amount. As news of the company’s troubles spread, customers rushed to withdraw their funds, only to find themselves locked out of their accounts and unable to make withdrawals.
One of Mr. Bankman Fried’s key beliefs, which was also the basis for founding FTX, was effective altruism. This belief promotes earning as much money as possible and using evidence-based approaches to benefit humanity with the funds. However, the £14.9 million UK manor home known as “Effective Altruism Castle,” which was purchased by the Effective Ventures Foundation (EV) with support from FTX, is now being sold after just two years. The current asking price for Wytham Abbey, located outside of Oxford, is £15 million. According to EV UK’s CEO Rob Gledhill, the proceeds from the sale will go towards high-impact charities after covering the cost of the sale.
