One of yesterday’s trending news stories on X was a supposed reminder that today, September 30, would be the day that FTX bankruptcy creditors would receive approximately $16 billion. Like many breaking headlines on X, however, that is entirely untrue.
Posts about the supposed payouts and the ostensible distribution of FTT liquidity earned hundreds of thousands of impressions and thousands of likes. Undeterred by fact checks, traders bid up the price of FTX’s proprietary token, FTT, from less than $1.40 on Saturday to a high of $2.71 on Sunday.
Although FTX’s bankruptcy estate has announced plans to make distributions during the fourth quarter, there are no distributions happening this week. The next earliest date that distributions could occur would be after the bankruptcy plan confirmation hearing on October 7 in the US Bankruptcy Court for the District of Delaware.
Read more: CHART: Everyone sentenced from FTX and Alameda
FTX to repay ‘in full with interest’… with a catch
As Protos noted in a previous fact check, if that court confirms FTX’s Chapter 11 bankruptcy plan next week, that confirmation might allow FTX to repay approximately 98% of customers and unsecured creditors “in full with interest” using a USD calculation for all crypto asset prices as of November 11, 2022.
That means, sadly, a price of just $16,871 per bitcoin and similarly dismal rates for altcoins.
Although creditors have blamed the estate for “breathlessly touting what they claim to be a full recovery with interest” that is “nothing of the sort,” calculations based on November 11, 2022 prices abide by the court’s rules.
For historical context, Sam Bankman-Fried’s giant crypto exchange FTX collapsed in November 2022 due to multiple executives’ fraud and theft of customer deposits. Five senior leaders have pleaded guilty to US criminal charges and two have already received multi-year prison sentences.
Within hours of its demise, a clean-up crew of executives led by Enron’s post-bankruptcy expert, John J. Ray III, overtook control and began assessing the wreckage. Fast forward to today, and a bull market in crypto plus untold hours of negotiations and legal proceedings have allowed FTX to recover most of its USD cost basis as of its November 11, 2022 bankruptcy.
Payouts to most FTX customers who filed relatively small claims could occur sometime this month, pending the outcome of court proceedings on October 7. Claimants should refer to the official bankruptcy website and carefully fact-check social media claims, such as yesterday’s inaccurate claim that FTX would be paying $16 billion today.