FTX announces full compensation for customers, but the real winner may surprise you

In an unexpected turn, bankrupt cryptocurrency exchange FTX recently announced a new repayment plan aimed at fully compensating creditors and customers. The plan also includes a substantial compensation offer to account for the time value of its investment.

While customers were initially expected to be the main beneficiaries, the biggest winners from the repayment plan were not the customers themselves, but bankrupt traders.

Full refund provided by FTX

As Bitcoinist reported, FTX’s reorganization plan was submitted to the U.S. Bankruptcy Court for the District of Delaware, outlining the distribution of funds to customers affected by the exchange’s fraud scheme.

The plan includes the centralized distribution of all the company's assets from its collapse in November 2022 to its creditors and customers. FTX has announced multiple settlement agreements with major financial stakeholders, some of which are still awaiting finalization and court approval.

Notably, a key settlement involves resolving a $24 billion claim filed by the Internal Revenue Service (IRS), with FTX agreeing to pay $200 million in cash and $685 million in subordinated claims.

Broken traders become real winners

Contrary to expectations, the real beneficiaries of the repayment plan were the bankrupt traders who moved quickly to purchase claims for less than a fraction of their value before FTX officially filed for bankruptcy.

These hedge funds and individual investors have seen bids rise from 10% to 101% of the claim, demonstrating their shrewd decision-making to seize this opportunity.

Hedge funds specializing in distressed debt, such as Attestor, Baupost and Farallon, have emerged as frontrunners in generating strong returns from FTX assets, Fortune reports.

According to Fortune, hedge funds specializing in distressed debt such as Attestor, Baupost and Farallon have emerged as frontrunners in generating strong returns from FTX assets.

The funds bought claims worth hundreds of millions of dollars and stood to make handsome profits. Other notable beneficiaries include Louis d’Origny, founder of claims buying platform FTX Creditor, who is on track to earn more than $25 million from his personal investments.

Although FTX's repayment plan has allowed some people to obtain considerable returns, this does not mean that all claimants are satisfied with it. Some investors believe that the value of the cryptocurrency tokens they claim in their claims should be calculated based on current market prices, rather than based on previous lower price standards.

Arush Sehgal, an investor and former member of FTX’s unsecured creditors committee, has criticized the current managers’ sales tactics and believes the damage done by the current managers is more serious than the original crimes committed by former CEO Sam Bankman-Fried. .

Bankman-Fried, the exchange's failed co-founder and CEO, is currently being held at Brooklyn's Metropolitan Detention Center after being sentenced to 25 years in prison for defrauding customers.

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