Empire Newsletter: FTX’s bankruptcy isn’t the success you think it is

Would you rather have $88,000 or $17,400?

article-image

J illustration/Shutterstock and Adobe modified by Blockworks

share

FTX creditors missed a bigger payout

Read any mainstream media article about FTX and you’ll see headlines like: 

  • New York Times: “FTX Customers Poised to Recover All Funds Lost in Collapse”
  • WSJ: “Crypto Exchange FTX Is the Rare Financial Blowup That Will Repay Victims in Full”
  • Bloomberg: “FTX Plans to Repay Customers in Full”

The narrative being pushed is that the bankruptcy proceedings have been a huge success. 

But if you dig a little deeper, the reality is more complex.

FTX creditors will receive more than 100% of their claims. However, in real terms, they will get back only a fraction of the original crypto value. 

When FTX went under, most of their assets were tied up in crypto. Because of US bankruptcy laws, John J. Ray and law firm Sullivan & Cromwell fixed the value of these assets in dollars based on their price on the day of the bankruptcy filing date — Nov. 11, 2022. 

Since then, nearly all crypto assets have risen in value. Bitcoin has quadrupled and Solana, one of the primary assets held by FTX, has risen ten-fold. 

If FTX and their legal teams had held these assets instead of liquidating them, the value of those holdings could have increased significantly. This means that the customers could have seen their investments multiply several times over.

Let’s say you had 1 BTC and 100 SOL on FTX. At the time of the bankruptcy, these were worth roughly $16,000 for 1 BTC and $14 for 1 SOL. The bankruptcy process would result in you receiving $16,000 for the BTC and $1,400 for the SOL. 

But if the company had held the assets, you would now have $70,000 for the BTC and $18,000 for the SOL. 

That’s a difference of $88,000 vs. $17,400. 

Naturally, creditors are pissed. 

But Sullivan & Cromwell, which has already made some $180 million from the bankruptcy, is smart — they’ve pursued a tactful PR strategy to get ahead of the negative creditor narrative.

The goal: convince the mainstream media that paying customers back at 118% represents a success.

And as you can see in the articles above, this strategy is working.

— Jason Yanowitz

Data Center

  • After a healthy rally, the Ethereum Foundation again boasts the largest treasury (not counting self-issued tokens), now with more than $1.1 billion ETH.
  • Runes and Ordinal volumes are yet to bounce back, with BTC transfers making up more than 80% of all transactions over the past two weeks.
  • BSC has fallen out of the top-three for weekly DEX volumes, eclipsed by Arbitrum with almost $6 billion.

— David Canellis


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Ethena Labs is leaping from its flagship synthetic dollar, USDe, to a full product suite—USDtb, iUSDe, and the Arbitrum-based Converge Chain—designed to marry crypto-native yields with TradFi-grade compliance. Our analysis shows how expanding into CME, ETF options, and tokenized Treasuries could lift protocol revenue from sub-$500 million in a bear case to several billion dollars if favorable regulation and institutional adoption align.

article-image

CEO Mike Silagadze tells Blockworks that the US is “open for business” and why its DeFi bank offering is the first of many

article-image

Doing one thing well and leaving everything else out is often what disruptive technologies do best

article-image

Why an analyst is kicking off COIN coverage with “buy” rating

article-image

“Bitcoin does not require a strong equity rally to move higher,” YouHodler markets chief Ruslan Lienkha said

article-image

President Trump’s comments that he will not look to fire Fed Chair Jerome Powell sent stocks higher in after-hours trading Tuesday