Will FTX Customers Fully Recoup Their Money?

Former FTX customers "have reasons to believe they could actually recoup their money," reports CNBC:Bankman-Fried, who could spend the rest of his life behind bars, was found guilty in November on seven criminal counts after roughly $10 billion in customer funds from his company went missing. Some of that money went to pay for Bankman-Fried's lavish lifestyle, but much of it went towards other investments that have, of late, appreciated dramatically in value. Lawyers representing the bankruptcy estate of FTX told a judge in Delaware last week that they expect to fully repay customers and creditors with legitimate claims. Bankruptcy attorney Andrew Dietderich, who works with FTX's new leadership team, said "there is still a great amount of work and risk" ahead in getting all the money back to clients, but that the team has a "strategy to achieve it." It's a welcome development for the many thousands of customers (reportedly up to a million) who collectively lost billions of dollars in FTX's collapse 15 months ago, when the crypto exchange spiraled into bankruptcy in a matter of days. Given the lightly regulated and unsecured nature of FTX - and the crypto industry at large - those clients faced the real possibility that the vast majority of their money had evaporated. Plenty of failed hedge funds and lenders lost virtually everything during the 2022 crypto winter... [C]rypto was mired in a bear market, with bitcoin trading at around $16,000. It's now above $47,000... FTX's bitcoin stash, which was worth $560 million at the time of the September report, is today valued north of $1 billion. Bankman-Fried's investments weren't limited to crypto. He also used client money to back startups like Anthropic, the artificial intelligence company founded by ex-OpenAI employees. FTX invested $500 million in Anthropic in 2021, before the generative AI boom. Anthropic's valuation hit $18 billion in December 2023, which would value FTX's roughly 8% stake at about $1.4 billion. CNBC suggests this could affect the length of Bankman-Fried's prison sentence (which will be determined next month). There's now also a so-called "FTX IOU" market where investors are selling their debt, CNBC adds. "One financial firm that had lost around $100 million initially sold its FTX debt for 6 cents on the dollar in a new secondary market out of concern that he may never get a better deal. As of December, those claims were going for more than 70 cents on the dollar." CNBC also reports that FTX "had been negotiating with bidders about a potential reboot of the company, but those efforts were scrapped last month."

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