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FTX Targets 2024 Repayments Amid Bankruptcy

Amidst the FTX bankruptcy proceedings, a significant pledge has emerged: to kickstart customer repayments
April 2, 2024

The FTX bankruptcy saga takes a significant turn as the bankruptcy estate outlines its plan to commence repayments to customers by the close of 2024. This disclosure emerged during a pivotal meeting of FTX Digital's Joint Official Liquidators held in the Bahamas.

FTX's bankruptcy unfolds across two distinct processes: the Chapter 11 bankruptcy overseen by a Delaware court in the United States and the official liquidation of FTX Digital, the Bahamas-based subsidiary of FTX. Despite their separate jurisdictions, both entities have forged collaboration, ensuring equitable treatment for creditors as they navigate the complex aftermath of the collapse.

Key Meeting Highlights:

1. Targeted Repayments: The Chapter 11 Debtors and the Joint Official Liquidators aim to initiate the first interim distribution to creditors with admitted claims and satisfactory Know Your Customer (KYC) documentation by the conclusion of 2024.

2. Claims Submission: Creditors have been actively submitting their claims through FTX's claims portal since March 1. The deadline for choosing a bankruptcy process and submitting a claim, initially set for May 15, is now anticipated to extend until at least June 2024, reflecting recent developments.

3. Valuation Parameters: Claims, both under Chapter 11 and Bahamian proceedings, will be evaluated as of the initial bankruptcy claim date on November 11, 2022, ensuring consistency in the valuation process.

In a bid to alleviate financial strains, FTX recently agreed to divest the majority of its shares in AI startup Anthropic for a staggering $884 million. This strategic move aims to mobilize resources for creditors' repayment obligations. Notably, FTX and its affiliate Alameda initially invested $500 million in Anthropic in 2021, experiencing a substantial surge in share value fueled by the flourishing artificial intelligence sector, buoyed in part by innovations like ChatGPT.

Furthermore, the founder of FTX, Sam Bankman-Fried, has been handed a 25-year prison sentence following his conviction on charges related to fraud and money laundering. The severity of the sentence underscores the gravity of FTX's collapse and its repercussions. While the prospect of parole remains absent in federal criminal cases, Bankman-Fried may potentially reduce his sentence through good behavior, although experts suggest he could serve at least 12.5 years.

As FTX navigates these tumultuous waters, stakeholders await further developments, keenly observing the unfolding implications for the crypto and financial industries at large.

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