FTX’s Chapter 11 Plan Promising 118% Reimbursement Gains Near-Unanimous Creditor Support

Recently, FTX has reached a settlement  with the CFTC. Pending court approval, the settlement includes the subordination of a $4 billion CFTC claim, prioritizing creditor claims and interest payments.

According to the agreement, the CFTC’s $4 billion claim would be recognized but rank below all other creditor claims and interest. Rather than receiving immediate compensation, any payments that would have been made to the CFTC under their claim will be redirected to a Supplemental Remission Fund.

This fund is intended to offer additional financial relief to cryptocurrency holders who were adversely impacted by the exchange’s collapse. The fund will be activated only after all creditors have been fully reimbursed with interest, and if there are surplus funds remaining.

The settlement followed a District Court decision by Judge Kaplan, which had mandated a $4 billion disgorgement and a $8.7 billion restitution payment to creditors. As part of this agreement, FTX debtors were granted dollar-for-dollar credit toward the disgorgement amount.

A significant element of the settlement was the acknowledgment of the particular damage done to creditors with cryptocurrency-related investments, largely due to the alleged illegal activities. This recognition was reinforced by the influence of over 200 victim statements submitted to Judge Kaplan by those affected by FTX’s collapse.