FTX: Ellison pays in millions, administrator pays out billions
The bankruptcy court has approved the distribution plan of the bankrupt crypto exchange FTX. Ex-manager Caroline Ellison contributes something else.
16.5 billion dollars will be distributed.
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An important decision has been made in the bankruptcy proceedings of the crypto exchange FTX: The competent US federal bankruptcy court approved the distribution plan on Tuesday. Distributions of 16.5 billion US dollars are planned. This means that most customers will be compensated – but usually in dollars, not in cryptocurrencies. Most crypto holdings have long since been sold. They will be paid out in dollars, but at the exchange rate on the date the bankruptcy was opened in November 2022. At that time, most cryptocurrencies were worth significantly less than they are today.
There is no money for FTX's own cryptocurrency FTT. The insolvency administrator has now scraped together so much money that there may even be some left over in the end to pay partial compensation to certain preference shareholders after customers and other creditors. The last word on this has not yet been spoken.
Rare success
Such an allocation is rare in insolvency proceedings. In the case of the FTX Alameda Research conglomerate, however, several fortunate circumstances came together. On the one hand, a block of shares held by FTX in the AI company Anthropic PBC proved to be unexpectedly valuable. On the other hand, the exchange rates of many cryptocurrencies recovered between the bankruptcy filing and the time of sale.
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Real estate sales and settlements with former managers of FTX and Alameda Research as well as other profiteers (such as the parents of the co-founder known as SBF, Sam Bankman-Fried) have brought in further sums. A settlement with SBF's ex-girlfriend and Alameda boss Caroline Ellison was only announced on Tuesday. The confessed billion-dollar fraudster was sentenced to just two years in prison on September 24. SBF received 25 years, accomplice Ryan Salame seven and a half years.
Caroline Ellison hands over assets
One day earlier, the woman had agreed to pay practically all of her assets into the estate. From July 2021 to September 2022, Ellison paid herself around 29 million US dollars in bonuses, even though the speculative fund Alameda Research owed billions to FTX. The money came from embezzled FTX customer deposits. Ellison himself invested ten million dollars of the money in Anthropic shares, which are now worth much more.
Ellison must now hand over these shares (or the proceeds of their sale), other money and everything else she owns. The only exceptions are payments she must make as a result of her criminal conviction, personal property and money she needs to pay her legal bills. The latter amount is capped at 1.5 million dollars. In view of the distribution sum of 16.5 billion dollars, her contribution is nevertheless modest.
The ex-manager has also undertaken to support the new FTX administrators in tracking down any assets that have not yet been unearthed and to answer any other questions. In addition, she undertakes to waive all claims and rights.
Campaign contributions
According to reports, the insolvency administrators have hardly received anything back from campaign funds. FTX made millions of dollars in campaign donations to US politicians, paid for with embezzled customer funds.
In the meantime, other crypto companies have taken FTX's place. The cryptocurrency industry is pouring an even bigger avalanche of money into the current US election campaign.
The insolvency proceedings In re: FTX Trading Ltd are pending in the US Federal Bankruptcy Court for the State of Delaware under case number 22-11068.
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