FTX Says Legacy Customers Could Become Exchange’s New Owners

FTX laid out its first vision of the crypto company’s future after bankruptcy, saying it could hand over stakes in a rebooted exchange to customers who are owed more than $9 billion in deposits the company can’t locate. 

The management team guiding FTX through bankruptcy will try to reboot its international exchange, FTX.com, according to a bankruptcy reorganization plan filed Monday. The company also said it may try to bridge any shortfall of funds owed to those customers by offering them “equity securities, tokens or other interests” in the restarted platform.

Earlier this year, FTX identified a roughly $9 billion shortfall that it owes to customers who deposited their cryptocurrency on FTX.com, the company’s main international exchange. Although the company has filed lawsuits to recover billions of dollars against other crypto firms and insiders including its co-founder Sam Bankman-Fried, it is unclear whether litigation will recover enough cash to close the gap.

The bankruptcy plan filed Monday marks the first time the company has sketched out how it plans to compensate millions of customers who have been frozen out of their accounts since it collapsed last year. FTX also acknowledged for the first time that it may seek to give customers equity stakes in some part of its business as compensation for deposited funds that have been permanently lost.

FTX revealed other details about its postbankruptcy future, as well. FTX said Monday it may create a trust to hold any venture capital or token investments still in its possession when it leaves chapter 11.

FTX was an early investor in a number of tech companies, including artificial intelligence firm Anthropic, that have appreciated. The trust would oversee the investments and make cash distributions at a future date.

All holders of the company’s in-house token FTT will likely be wiped out under the reorganization plan. The company didn’t indicate that it intends to reboot FTX US, meaning customers who have funds stranded on the American exchange are likely to be repaid a fraction of what they are owed in cash.

Many key details remain unknown. Legacy customers of FTX’s exchanges have until September to file claims for their account balances and FTX hasn’t yet provided estimates of how much they should expect to recover. 

A court-appointed committee representing millions of customers and other creditors said the company didn’t provide enough detail and didn’t engage on how to allocate value “to the creditors most injured by the fraud that occurred.”

FTX and its affiliated trading firm Alameda Research filed for bankruptcy last November. Control was handed over to John J. Ray III in the hours before the chapter 11 filing, and FTX has been managed by him, lawyers, and consultants since that time, at a cost of roughly $330 million so far, according to the creditors committee.

Bankman-Fried was arrested in the Bahamas in December and extradited to the U.S. on charges of wire fraud and misleading investors. He has denied wrongdoing and his criminal trial is scheduled to begin in October.

Write to Alexander Saeedy at [email protected]