Opinion: FTX Victims Should Be Grateful, Not Angry
2024-10-08

A judge has finally approved plans that will deliver much-needed repayments to FTX customers — almost two years after the doomed exchange collapsed.
Under the deal, 98% of those owed money will receive 119% of their claim back. Essentially, they’ll be rewarded interest for the inconvenience and distress caused by this bankruptcy.
But even though this will bring the sorry saga to a close and allow victims to finally move on with their lives, a sizeable chunk of creditors remains deeply dissatisfied by the outcome.
In some ways, it’s understandable. The amount they’ll receive is based on the cash value of their accounts back in November 2022.
That’s not too raw a deal for those who had dollars lying around — but it is pretty calamitous for those who held Bitcoin, Ether, Solana, and other cryptocurrencies.
Why? Because someone who had 1 BTC and 10 SOL will be entitled to about $18,667… substantially less than what this crypto stash is worth at current market rates.
If the payouts were based on the value of these coins now, that same FTX creditor would be walking away with about $64,000 — almost four times more than what they’re actually getting.
For those who trusted Sam Bankman-Fried and were drawn in by his company’s star-studded adverts, this will be a kick in the teeth. FTX was chronically mismanaged, and risky bets were being made using customer funds without their consent. Because of this, victims missed out on a huge rebound in the crypto markets — and potentially life-changing sums of money.
But at the same time, there’s another argument to be made: some FTX customers don’t appreciate how lucky they are — and need to realize that things could have been a lot worse.A Bankruptcy Done Well
When FTX abruptly halted withdrawals and began Chapter 11 proceedings, there was a gaping multibillion-dollar black hole in the company’s finances. Initially, it was feared that creditors may only get cents on the dollar — meaning they’d lose a substantial chunk of their savings.
But John Ray, best known for steering Enron through one of the messiest collapses of the 21st century, led a team that rapidly untangled SBF’s sloppy accounting practices — and rebuilt the exchange’s books from the ground up.
FTX’s new management has now confirmed that between $14.7 billion and $16.5 billion can now be paid back, considerably more than what was required, in what amounts to “the largest and most complex bankruptcy estate asset distribution in history.” 
The fact that all of this was achieved in under 24 months is all the more remarkable. Ray previously said that Caroline Ellison, the CEO of a sister trading firm that funneled substantial amounts of FTX funds, had played an instrumental role in piecing things back together.
Those who are unhappy with the compensation they’re receiving would do well to remember a few things: for one, some bankruptcies can take decades to resolve.
Mt. Gox — which was the world’s largest crypto exchange at one point — serves as a perfect example of this. The platform went bust back in 2014 after 850,000 BTC was stolen in a hack. While affected customers are being compensated in Bitcoin and Bitcoin Cash, which has dramatically risen in value, they’ve faced a 10-year wait and no shortage of anguish. By contrast, FTX victims now have closure and the freedom to move on with their lives.
Some of those caught up in other crypto bankruptcies haven’t had the same happy ending, either. Celsius Network customers ended up voting on a plan that meant they would receive just 67% to 85% of the funds they had locked up in this platform — a pretty substantial loss. Spare a thought too for those who held LUNA and UST, who didn’t even have the courts to support them as a death spiral wiped $40 billion in value from the crypto markets.
And when you zoom out and look at bankruptcies more generally, including those beyond the crypto sector, it becomes clear that an outcome like the one seen at FTX is incredibly rare. As Yesha Yadav, a bankruptcy specialist at Vanderbilt University Law School, :
“Generally, anything over 100 cents on the dollar is close to miraculous.” Counting Blessings
Yes, FTX customers have missed out on a crypto rally, but this is the glass-half-empty way of looking at things, and there will be plenty more bull markets to catch in the future.
The glass-half-full approach is this: victims will soon receive every single dollar they deposited into this exchange — not to mention a substantial chunk extra. This will comfortably beat the interest that would have been earned in a savings account, and ensure that this initial capital hasn’t been eroded by inflation.
This is a reset button, a chance to rebuild, an opportunity to pretend it never happened. And it’s a much better alternative to prolonged battles for resolution and seeing hard-earned savings decimated. The final outcome could have been much, much worse.
And with Sam Bankman-Fried sentenced to 25 years behind bars, with Caroline Ellison now beginning a two-year jail term of her own, victims can also feel like justice has been served.
FTX customers have had an awful time — with no shortage of stress, anxiety, anguish, financial hardship and heartache. But there’s no point ruminating on what could have been, or stewing on the terms of this repayment plan. It’s time to move on.
Disclaimer: The opinions in this article are the writer’s own and do not necessarily represent the views of Cryptonews.com. This article is meant to provide a broad perspective on its topic and should not be taken as professional advice.