FTX says it will return money to most of its customers
NPR Online NewsMAY 12 2024
A US Judge John Dorsey ruled Monday that former customers of the now-defunct cryptocurrency exchange FTX will be reimbursed around 119% of the money they had hunder the company's management before it went bankrupt in 2022.US Judge John Dorsey on Monday ruled that former customers of the now-defunct cryptocurrency exchange FTX will be reimbursed around 119% of the money they invested in the company before it went bankrupt in 2022.
The ruling means that FTX must pay a total of up to $16.5B in reimbursements, covering an estimated 98% of customers who held $50K or less in their accounts at the time of the bankruptcy. FTX says its goal is to pay between $14.7B and $16.5B.FTX must pay up to $16.5B in reimbursements, covering an estimated 98% of customers who held $50K or less in their accounts at the time of the bankruptcy. FTX said its goal is to pay between $14.7B and $16.5B.
The company, whose founder Sam Bankman-Fried has been sentenced to 25 years in prison for stealing customer's investments, was convicted of funneling the money into its sister company, Alameda Research, for personal business investments and political donations.Previously FTX founder Sam Bankman-Fried was sentenced to 25 years in prison after he was convicted of stealing investors' money and funneling it into a sister company, Alameda Research, for personal business investments and political donations.
WhileIn in a perfect world, customers would receive compensation with full interest, but this settlement iswill certainlyat least be better than nothing. By putting a good chunk of the stolen money into valuable assets, FTXSam Bankman-Fried can nowmake some amends by helping FTX sell those holdings and pay back most of its victims at 9% interest. Most bankruptcy cases wouldn't force the company to pay any compensation, so this is a lucky deal.
While it's true that something is better than nothing, and that bankruptcies usually result in zero compensation, it's inaccurate to claim customers are being 100% compensated. If FTX didn't outright steal people's property and use it to fund Sam Bankman-Fried's lavish lifestyle, many of these victims would be enjoying incredible profits right now.