A U.S. judge has approved FTX’s bankruptcy reorganization plan, marking a significant milestone in the crypto exchange's complex Chapter 11 case. The approval paves the way for customers and creditors to begin receiving repayments. FTX, which collapsed in 2022 following allegations of fraud, will now distribute approximately $16 billion in recovered funds to its creditors.

The plan was approved by U.S. District Judge John Dorsey in the Bankruptcy Court for the District of Delaware on Monday, bringing nearly two years of legal proceedings to a close. Judge Dorsey praised the process as a “model case for how to handle a complex bankruptcy.” The plan will ensure that 98% of creditors receive at least 118% of their claim value in cash.

One of the key points of contention during the proceedings was how to return funds to creditors, with some, like Sunil Kavuri, representing the largest creditor group, advocating for payouts in cryptocurrency rather than cash. However, it was ultimately decided that repayments would be made in cash, as FTX did not have the necessary cryptocurrency to make in-kind distributions.

The judge also reaffirmed that the value of FTX’s native token, FTT, is considered zero. Judge Dorsey stated that FTT tokens were “inextricably intertwined with the debtors” and that, with the exchange not being revived, there is no basis for the token to gain value.

FTX’s downfall, which started in late 2022, shook the Bitcoin and crypto world. Former CEO Sam Bankman-Fried was convicted of multiple counts of fraud and sentenced to 25 years in prison. Sister company Alameda and its CEO Caroline Ellison were also implicated, with Ellison receiving a two-year prison sentence.

With the approval of the bankruptcy plan, FTX’s customers and creditors can expect to start seeing repayments soon, marking the end of one of the most significant collapses in the cryptocurrency industry.

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