Bitcoin BTC/USD and cryptocurrency trading platform FTX Trading, which filed for bankruptcy in November 2022, has received preliminary approval for its reorganization plan from its creditors.
What Happened: FTX announced that its amended reorganization plan has received overwhelming support from all classes of creditors entitled to vote. Over 95% of the creditors who submitted their votes were in favor of the plan, reported the Wall Street Journal.
The final voting results will be submitted to the bankruptcy court before the confirmation hearing scheduled for October.
Why It Matters: The overwhelming support for FTX’s reorganization plan comes in the wake of a tumultuous period for the company. Earlier this month, a U.S. judge ordered FTX and Alameda Research to pay $12.7 billion in restitution and disgorgement to creditors.
This ruling stemmed from a lawsuit filed by the Commodity Futures Trading Commission, accusing the two entities of fraud and misrepresentations about the state of FTX’s operations.
Before that, in July, the Securities and Exchange Commission had initiated a lawsuit against Silvergate Capital, a bank significantly impacted by the downfall of FTX. The lawsuit alleged securities fraud and listed several former Silvergate executives as defendants.
In June, FTX faced backlash from customers over a proposed liquidation plan. The plan aimed to repay customers in cash, but some customers were unhappy with the terms. FTX claimed it had recovered $16 billion in assets, including $12 billion in cash, enough to repay all customer claims in full.
Earlier this year, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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