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

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

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.

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.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

More than 75 million U.S. Galaxy owners gain integrated Coinbase One access through Samsung Wallet, with global rollout planned

by Blockworks /
article-image

The central bank signed agreements with firms for fraud, payments, and app services ahead of a potential launch

by Blockworks /
article-image

Experts agree that the shutdown will delay new crypto ETF approvals, but lawmakers seem keen to move ahead with legislative work

article-image

The perp DEX verifies matching and liquidations with custom zero-knowledge circuits and keeps user assets on Ethereum

article-image

The derivatives giant will extend futures and options access to round-the-clock trading in early 2026

by Blockworks /
article-image

Global fiber network goes live as SEC clears 2Z token for utility use

by Blockworks /