22 May, 24

How is Bankrupt FTX Paying Back Its Customers?

ftx paying back banner


FTX, once a major player in the cryptocurrency exchange market, filed for bankruptcy in November 2022 following revelations of significant mismanagement and fraudulent activities. The collapse left millions of customers in financial distress, fearing that their investments were lost forever. However, recent developments indicate that FTX is on the path to fully repaying its customers, an outcome that seemed improbable just a year ago. This article explores how FTX is achieving this remarkable turnaround.

The Collapse of FTX

FTX’s downfall was swift and dramatic. In November 2022, it was revealed that the exchange had been misusing customer funds to make risky investments, leading to a liquidity crisis. The subsequent bankruptcy filing exposed a massive shortfall, with the company holding only a fraction of the assets needed to cover customer deposits. Former CEO Sam Bankman-Fried was found guilty of multiple charges, including fraud and money laundering, and faces a lengthy prison sentence.

Recovery Through Asset Liquidation

One of the primary strategies FTX has employed to generate the funds necessary for repayment has been the liquidation of its substantial asset portfolio. This includes selling off various investments and holdings, some of which have significantly appreciated in value since the bankruptcy. For instance, FTX’s stake in the AI company Anthropic has been a significant contributor. The value of these assets has increased alongside a broader bullish trend in the cryptocurrency market, allowing FTX to recover more funds than initially anticipated​.

The Role of the Bull Market

The cryptocurrency market has experienced a resurgence, with the prices of major cryptocurrencies like Bitcoin and Ethereum rebounding sharply from their 2022 lows. When FTX collapsed, Bitcoin was trading around $16,000. It has since risen to all-time highs of around $70,000. This substantial increase has played a crucial role in boosting the value of the assets that FTX held, enabling the company to generate enough liquidity to cover its obligations to customers​.

Structured Repayment Plans

FTX has developed a structured repayment plan approved by the bankruptcy court. The plan divides assets into distinct pools: one for FTX.com customers, one for U.S. customers, and a general pool for other creditors. According to the amended plan, FTX aims to repay up to 90% of the available assets to its customers. The company estimates that it has around $8.9 billion available for FTX.com and $166 million for FTX.US​.

Customer Clawbacks and Preferences

Part of the repayment plan involves “clawbacks” from customers who withdrew large sums shortly before the bankruptcy. Customers who withdrew more than $250,000 within nine days of the bankruptcy filing will have their claims reduced by 15%, while those who withdrew less will not face reductions. This measure aims to ensure a fairer distribution of the recovered funds among all creditors​.

Exclusion of Insiders and Affiliates

FTX’s recovery plan also includes strict measures to exclude insiders, affiliates, and those who had knowledge of the misuse of funds from benefiting from the repayments. This ensures that the recovered funds are directed primarily towards innocent customers who were unaware of the fraudulent activities within the company​.


FTX’s ability to repay its customers, in full or nearly full, is a rare and notable achievement in the realm of corporate bankruptcies. The combination of asset liquidations, the cryptocurrency market’s recovery, and a well-structured repayment plan has turned a dire situation into a remarkably positive outcome for FTX’s customers. This case highlights the importance of effective asset management and strategic planning in mitigating the impacts of financial crises.


1. How did FTX collapse? FTX collapsed due to mismanagement and fraudulent activities, including the misuse of customer funds for risky investments, which led to a liquidity crisis.

2. How is FTX able to repay its customers? FTX is repaying its customers through the liquidation of its assets, which have appreciated significantly in value, and through the positive effects of a bullish cryptocurrency market.

3. What role did the cryptocurrency market play in FTX’s recovery? The cryptocurrency market’s resurgence significantly increased the value of FTX’s assets, providing the necessary liquidity to cover customer deposits.

4. What are customer clawbacks? Customer clawbacks refer to the reduction of claims for those who withdrew large sums shortly before the bankruptcy, ensuring a fairer distribution of recovered funds.

5. Are all customers being repaid? Most customers are expected to be repaid, with significant efforts to exclude insiders and those involved in the misuse of funds from benefiting from the repayments.

FTX’s case is an extraordinary example of how strategic asset management and favorable market conditions can turn around a seemingly hopeless bankruptcy situation, ultimately benefiting the customers who were most affected by its collapse.

About Zerocap

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com


This material is issued by Zerocap Pty Ltd (Zerocap), a Corporate Authorised Representative (CAR: 001289130) of AFSL 340799. Material covering regulated financial products is issued to you on the basis that you qualify as a “Wholesale Investor” for the purposes of Sections 761GA and 708(10) of the Corporations Act 2001 (Cth) (Sophisticated/Wholesale Client). This material is intended solely for the information of the particular person to whom it was provided by Zerocap and should not be relied upon by any other person. The information contained in this material is general in nature and does not constitute advice, take into account the financial objectives or situation of an investor; nor a recommendation to deal. Any recipients of this material acknowledge and agree that they must conduct and have conducted their own due diligence investigation and have not relied upon any representations of Zerocap, its officers, employees, representatives or associates. Zerocap has not independently verified the information contained in this material. Zerocap assumes no responsibility for updating any information, views or opinions contained in this material or for correcting any error or omission which may become apparent after the material has been issued. Zerocap does not give any warranty as to the accuracy, reliability or completeness of advice or information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Zerocap and its officers, employees, representatives or associates do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This is a private communication and was not intended for public circulation or publication or for the use of any third party. This material must not be distributed or released in the United States. It may only be provided to persons who are outside the United States and are not acting for the account or benefit of, “US Persons” in connection with transactions that would be “offshore transactions” (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). This material does not, and is not intended to, constitute an offer or invitation in the United States, or in any other place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. If you are not the intended recipient of this material, please notify Zerocap immediately and destroy all copies of this material, whether held in electronic or printed form or otherwise.
 Disclosure of Interest: Zerocap, its officers, employees, representatives and associates within the meaning of Chapter 7 of the Corporations Act may receive commissions and management fees from transactions involving securities referred to in this material (which its representatives may directly share) and may from time to time hold interests in the assets referred to in this material.  Investors should consider this material as only a single factor in making their investment decision.

Like this article? Share
Latest Insights

22 May, 24

Web 2 versus Web 3: Key Differences

The internet has undergone significant transformations since its inception, evolving from static Web 1.0 pages to the dynamic and interactive Web 2.0. Now, we stand

22 May, 24

Blockchain Business Applications: Improving Any Sector

Blockchain technology, initially synonymous with cryptocurrencies like Bitcoin, has evolved into a multifaceted tool with significant applications across various traditional business sectors. This evolution is

Weekly Crypto Market Wrap, 17th June 2024

Download the PDF Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets

Receive Our Insights

Subscribe to receive our publications in newsletter format — the best way to stay informed about crypto asset market trends and topics.

Want to see how bitcoin and other digital assets fit into your portfolio?

Contact Us
Ready to sign up?
Create an Account