Judge approves FTX bankruptcy plan

FTX “never had the crypto” to make in-kind distributions, witness says at FTX’s confirmation hearing

article-image

CryptoFX/Shutterstock modified by Blockworks

share

The FTX estate appeared in front of a court Monday for a hearing centered on its bankruptcy 

plan, which was proposed back in May of this year. 

After a hearing that spanned most of Monday, bankruptcy court Judge John Dorsey signed off on the plan, allowing FTX to move one step closer to fully winding down. 

The judge praised the plan, calling it a “model case” for a “complicated” bankruptcy. 

FTX’s plan, which received “overwhelming” support from creditors, was presented to the Delaware Bankruptcy Court for confirmation. However, there’s been plenty of controversy around the plan, which would — upon winding down — distribute funds to creditors based on the asset prices of crypto back in November 2022. 

Read more: Why FTX is different from other crypto bankruptcies

Former FTX customers had previously fought for distributions to be made in-kind, meaning that customers would receive crypto instead of payments in cash.

However, during a cross-examination during Monday’s hearing, Alvarez & Marsal’s Steven Coverick told the court that the debtors didn’t have the crypto in order to make in-kind distributions. Coverick and his firm worked with the debtors on the plan. 

FTX, he added, “never had the crypto.”

The estate, per the May filing, owes creditors roughly $11 billion, and has managed to find somewhere between $14.5 billion and $16.3 billion in cash. 

The hearing Monday confirmed that the estate researched ways to return crypto back to former customers, but it would have been expensive and would have lowered the amount returned, Coverick added. 

Due to the way in which the estate would have to go about purchasing the crypto, the purchases would potentially “result in a run-up in the market,” he told attorney David Adler.

The plan, however, doesn’t rule out distributions made in stablecoins.

Per a May court filing, 98% of non-government creditors will receive “at least” 118% of claims in cash within two months of the plan being approved. 

The hearing marks another milestone in the saga of FTX, which is coming up on the two-year anniversary of its collapse. Since the November 2022 crash, former CEO Sam Bankman-Fried has both been tried in court and found guilty. He is serving a sentence of 25 years. Former Alameda CEO Caroline Ellison has also been sentenced, she faces two years in jail. FTX executive Ryan Salame faces a sentence of seven and a half years in jail.

Nishad Singh and Gary Wang, both executives who testified at Bankman-Fried’s trial last year, are set to be sentenced next month.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

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.

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

morpho 2 graphic.png

Research

Utilizing a ‘DeFi Mullet’ approach, Coinbase’s Bitcoin-backed loans integration with Morpho demonstrates a powerful blueprint for CEXs to monetize dormant assets by expanding adoption of wrapped products (cbBTC, USDC) while also supporting native and/or preferred DeFi ecosystems (Base) which can further lead to downstream growth in onchain liquidity and increased utilization of the related assets.

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform

article-image

The company’s expanded lineup introduces new ETF products, as more and more issuers get into crypto funds

article-image

President Donald Trump announced a 10% levy on almost all goods and additional tariffs on so-called “worst offending” countries

article-image

Solana may be in “recomposition” mode, as new protocols put usefulness ahead of mere virality

article-image

The stablecoin issuer will have to contend with bigger players and the interest rates environment

article-image

The president reportedly was still working on his tariff policy plans late Tuesday evening