Bankrupt crypto exchange FTX submitted an amended proposal to return up to 90 percent of creditor holdings held on the exchange before it went bankrupt in November 2022.

Quoted from Yahoo Finance, Wednesday (18/10/2023), the debtor group currently overseeing the bankruptcy process will officially submit a plan no later than December 16 2023 to the US Bankruptcy Court for examination.

In 2022, FTX collapsed after Coindesk published disclosures regarding the condition of its balance sheet. CEO John J. Ray III railed against financial controls at the company, while FTX founder Sam Bankman-Fried is on trial on criminal charges.

The debtor proposed to divide the lost customer assets into three groups based on the circumstances at the start of the Chapter 11 case, segregated assets for FTX.com customers, assets for FTX.USD customers and a general pool of other assets.

The proposal states customers with a preferred settlement amount of less than USD 250,000 can receive a settlement without any reduction in claims or payments. Preferential settlement is 15 percent of the customer’s withdrawal on the exchange, nine days before maturity.

Creditors will subsequently receive deficiency claims against the general pool corresponding to the estimated value of the assets lost on their exchanges estimated at nearly USD 9 billion for FTX.com and USD 166 million for FTX.US, the exchange’s United States arm.

However, recovery can be disrupted by various factors including taxes, government claims, token price fluctuations and others.

Additionally, debtors can exclude “insiders, affiliates, customers” from the settlement who may have been aware of the commingling and misuse of customer deposits and company funds, or who changed their KYC information to facilitate withdrawals when the funds were stopped.

The debtor said that payments to these customers may not reflect the fair value of the FTX debtor’s claims.