FTX Debtors, the affiliated debtors of FTX Trading Ltd., have proposed a settlement of customer property disputes in their pending chapter 11 cases. The settlement, known as the “Customer Shortfall Settlement”, is part of an amended Plan of Reorganization. If approved by the Bankruptcy Court, it is estimated that customers of FTX and FTX US would receive over 90% of distributable value worldwide by the end of the second quarter of 2024.

The future recoveries for customers and non-customers will depend on many variables, including the resolution of tax and governmental claims, and the FTX team’s ongoing asset recovery efforts.

Proposal for withdrawal

According to @spreekaway, Debtors offer a settlement of 15% of net withdrawals within 9 days of bankruptcy filing. If your net withdrawal in the last 9 days is greater than $250k, you can pay back 15% and they’ll agree not to sue. However, if your net withdrawal in the last 9 days is less than $250k, they won’t go after you.

The proposed plan involves dividing the assets into three pools — assets segregated for the benefit of FTX.com customers, U.S. customers, and a general pool of other assets. As part of this plan, 66% of the General Pool would be applied exclusively to pay customers’ Shortfall Claims. The remaining 34% of the General Pool would be applied to pay remaining Shortfall Claims and other claims ratably.

Resolution for customer property litigation

If approved by the Bankruptcy Court, the Customer Shortfall Settlement would resolve the customer property litigation filed against the FTX Debtors and facilitate confirmation of the Amended Plan in the second quarter of 2024.

In conclusion, this proposed settlement represents a significant step towards resolving the financial disputes arising from FTX’s bankruptcy. It also underscores the complexities involved in managing digital assets and highlights the need for robust regulatory frameworks to protect customers’ interests.