Failed cryptocurrency exchange FTX will seek customer approval for its Chapter 11 plan to compensate victims and resolve government penalties resulting from the fraudulent collapse of the platform in November 2022.

Judge John Dorsy's decision marks an important step forward in the two-year bankruptcy process, as the vote of creditors plays a key role in the restructuring work. While FTX's plan has received support from the main client committee, a candid group still opposes it and calls for substantial modifications.
FTX offers clients a 119% asset recovery
According to Bloomberg, under the proposed plan, as of the date of the filing of Chapter 11 in November 2022, it is expected that most FTX customers will recover 119% of their assets. Other creditors can receive up to 143% of the amount owed.
FTX's legal team insists that despite the subsequent pump in cryptocurrency prices, bankruptcy law requires claims to be valued based on their worth at the time of filing.
FTX has decided to solicit votes from its customer base in order to obtain feedback on the repayment plan from previously uninvolved parties.
In addition, the company is still negotiating with federal authorities and exploring compensation plans for affected customers by using the government's claim against FTX.
It is worth noting that FTX has resolved a $2.4 billion tax claim from the U.S. Internal Revenue Service. Under the terms of the settlement, the company will pay $200 million to the IRS within 60 days of implementing the proposed restructuring plan.
The settlement agreement allows FTX to pay a small portion of the amount claimed by the US Internal Revenue Service, clearing the way for the exchange to allocate important customer recovery payments.
The US Internal Revenue Service will also receive a lower priority claim of $685 million, which will be paid to customers and other creditors on a subordinated basis based on the availability of funds. FTX outlined these details in a filing submitted to a bankruptcy court in Delaware, USA.
SBF's fraud conviction has covered up the bankruptcy process.
FTX is currently monetizing its assets, as the platform reportedly lacks independent digital assets directly related to claims against the exchange. Instead, FTX has a pool of assets obtained from stolen customer funds, which presents a complex challenge in the compensation process.
Customers must vote on Chapter 11 plan by August 16th. Judge Dorsy will then review and potentially approve the plan on October 7th based on the customer voting results.
FTX, after its founder Sam Bankman-Fried (SBF), closed the cryptocurrency trading platform in 2022 and handed over control to bankruptcy professionals, applied for bankruptcy. Bankman-Fried subsequently faced a 25-year fraud conviction, and he recently announced that he will appeal.
A one-dimensional graph shows the downward trend of FTT's price. Source: FTTUSD on TradingView.com
At the time of writing this article, the trading price of the exchange's native token FTT is $1.43, which has increased by 2% in the past 24 hours and has only risen by 27% year-to-date.