FTX puts together billion-dollar package for aggrieved customers - with a catch

The insolvent exchange presented a plan to compensate injured customers, according to which 98 percent would get their money back.

Between US$14.5 billion and US$16.3 billion - that's how much money the insolvent crypto exchange FTX wants to pay back former bruised customers, according to a press release which was published yesterday (Tuesday).

According to the press release, the FTX on May 7 filed a corresponding reorganization plan with the U.S. Bankruptcy Court, stating that 98 percent of aggrieved users of the exchange will get back 118 percent of the cash value of their then-lost investments.

This corresponds to an annual interest rate of 9 percent.

Some investors feel this is insufficient. Mike Belshe, CEO of BitGo, shared on the messaging platform X (formerly known as Twitter): "I understand why the bankruptcy proceedings have to go the way they do, but let's not pretend that the victims will get their money back."

As a reminder, the demise of the company led by Sam Bankman-Fried occurred in November 2022, at the low point of the then-bear market, causing the Bitcoin price to fall below $16,000 at times.

Since FTX's bankruptcy, the Bitcoin price alone has risen about 280 percent, leaving many customers hoping for a refund at current prices for years.

Another catch: the whole thing is only for customers whose portfolios did not exceed US$50,000 at the time of the bankruptcy.

According to official information, the money must be disbursed within 60 days of the plan's approval by the competent court.

Sam Bankman-Fried, the former mastermind behind the exchange, is currently serving his prison sentence. On March 28 of this year, he was sentenced to 25 years behind bars, but he has appealed.