FTX Customers May Finally Be Able to Withdraw Their Funds

Cryptocurrency Customers to Recoup Losses After Liquidator Sets Aside $7 Billion

A whopping $7 billion will be set aside for customers as the liquidation process of the collapsed cryptocurrency exchange FTX begins to take shape, bringing relief to the thousands of customers who were scammed by the defunct platform.

Since its sudden collapse, wiping out billions of dollars in customer funds, FTX had repeatedly assured customers that assets were safe, with the company even urging them to trade confidently on its platform just a week prior to its filing for bankruptcy.

While FTX and its former subsidiary Alameda Research were deeply intertwined, with the latter using the former's proprietary trading platform for trading, the fact that Mr. Bankman-Fried was able to siphon off billions of dollars in customer funds for his personal use became apparent.

The liquidation process began with the appointment of John Ray III, a veteran bankruptcy expert who had previously led the Enron bankruptcy reorganization.

In a filing on January 18, 2023, Mr. Ray stated that the company would set aside $7.5 billion for distributions to customers, with the actual amount to be determined through the litigation process. Customer claims are expected to exceed $8 billion, implying that eventual payouts could exceed the projected $7.5 billion.

This is a significant development for FTX's estimated 1.2 million customers around the world who have been unable to withdraw their funds since the company's collapse last November.

While the prospect of recouping their losses remains a long and arduous journey, customers who managed to withdraw their cryptocurrencies to private wallets amid FTX's collapse may be the lucky ones.

This is because, unlike customers with fiat currency balances, those with crypto assets can still recover their funds, although it may be a lengthy process.

FTX's bankruptcy has cast a shadow over the entire cryptocurrency industry, with regulators honing in on the space to introduce stricter policies that will avoid such occurrences in the future.

The move by FTX to allocate $7 billion in customer funds signals a commitment to prioritizing customer claims, which, if materialized, will be a significant victory for victims of the disastrous collapse.

As the industry continues to evolve and mature, this development will play a crucial role in shaping trust and confidence in the future of cryptocurrency.