Customers Expected to Receive Over 90% of Distributable Value Worldwide if Amended Plan is Approved

Amended Plan to Include an Offer to Settle FTX.com and FTX US Preferences at Specified Amounts

Entwistle & Cappucci LLP today announced the settlement of that portion of its Customer Class Action that raised Customer property claims against FTX Trading Ltd. (d.b.a. FTX.com), and its affiliated debtors (together, the “FTX Debtors”), as part of the proposed settlement of Customer property disputes in the pending FTX chapter 11 cases (the “Customer Shortfall Settlement”). The Customer Shortfall Settlement resolves, among other things, Customer property litigation filed against the FTX Debtors by Entwistle & Cappucci LLP as part of a broader adversary Customer Class Action filed in the Bankruptcy Court against the Debtors and various individual defendants, including Sam Bankman-Fried and other insiders. The Customer property aspect of the class action litigation asserted that Customers of FTX.com and FTX US had property interests in certain assets, rather than an unsecured claim ranking equally with general creditors. The Customer Shortfall Settlement resolves the dispute by providing Customers a claim against the FTX Debtors that, although unsecured, has an equitable priority to certain property segregated at or taken from the exchanges.

Taking into account both the priority and the non-priority portions of the now-settled Shortfall Claim, the FTX Debtors estimate that Customers of FTX.com and FTX US would receive, collectively, over 90% of distributable value worldwide if the Amended Plan (incorporating the Customer Shortfall Settlement) is approved by the Bankruptcy Court by the end of the second quarter of 2024. The Customer Shortfall Settlement also contemplates an opportunity for eligible Customers to resolve the current uncertainty about any preference exposure applicable to their claims.

The Customer Shortfall Settlement was struck after months of extensive, arm’s-length negotiations by and between: the FTX Debtors; the representatives of the Customer Class Action (represented by Entwistle & Cappucci LLP); the Official Committee of Unsecured Creditors; and the Executive Committee of the Ad Hoc Committee of Non-U.S. Customers (representing Customers holding approximately $1 billion in FTX.com Customer claims). All of these parties have entered into a Settlement and Plan Support Agreement, which has been posted on the docket of the Bankruptcy Court and the Entwistle & Cappucci LLP website for informational purposes.

Andrew Entwistle, counsel for the Customer Class representatives said: “This Settlement is a great step forward and saves years of potential litigation. The anticipated allocation of over 90% of the distributable value of the bankrupt estate for the benefit of Customers reflects the fact that Customers are the true victims of the FTX fraud. It could not have been accomplished without the commitment and hard work of the Debtors (including John Ray III and the rest of the Board), the UCC and the Ad Hoc Committee and their counsel and advisors.”

On the question of whether this resolves the Customer Class Action in its entirety, Mr. Entwistle noted that “This Settlement only resolves the Customer claims against the Debtors. We will continue to work to further reduce the shortfall through the ongoing claims against Sam Bankman-Fried and the other insiders.”

Details regarding the Amended Plan, Customer recoveries and the proposed preference settlement are provided in the Release issued by the Debtors and the materials filed by the Debtors, all of which may be found here.

The Settlement notwithstanding, the FTX Debtors currently anticipate that due to the shortfall, Customers of the exchanges will not be paid in full. Future recoveries for Customers and non-Customers will depend on many variables, including the resolution of tax and governmental claims, the FTX team’s on-going asset recovery efforts, the results of avoidance action and other litigation, the claims allowance process, the extent to which compliance with Know-Your-Customer (KYC) procedures reduces the number of filed or accepted claims, fluctuations in the price of digital assets, fluctuations in effective interest rates and staking yields, the price at which illiquid fund, equity and token investments can be sold, the value of any consideration paid in connection with any successor offshore exchange, the timing of confirmation and effectiveness of the chapter 11 plan, the nature of any arrangements with respect to FTX Digital Markets and the FTX real estate in The Bahamas, the application of the proceeds of assets seized by the Department of Justice and other government agencies, and many other unresolved matters and pending initiatives.

The Know-Your-Customer Process

The Settlement does not change the fact that in order to receive a distribution, Customers MUST complete the Know-Your-Customer process. Any Customer that has not completed that process should do so immediately.

About Entwistle & Cappucci LLP

Entwistle & Cappucci LLP is a national law firm providing exceptional legal representation to clients in the most complex and challenging legal matters. Our practice encompasses all areas of litigation, corporate transactions, bankruptcy, insurance, corporate investigations, and white-collar defense. Our clients include public and private corporations, major hedge funds, public pension funds, governmental entities, leading institutional investors, domestic and foreign financial services companies, emerging business enterprises and individual entrepreneurs.

www.entwistle-law.com

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