What happens to FTX clawback cases if the company pays back its creditors?

When cryptocurrency exchange FTX went bankrupt about 15 months ago, it seemed few customers would get much money or crypto back from the platform. As John Ray III, who took over as CEO during the bankruptcy, put it: “Ultimately, we're not going to be able to recoup all the losses here.” He refuted Sam Bankman-Fried's repeated claims that he could get every customer's money back.

It turns out that FTX attorneys told a bankruptcy judge this week that they expected to pay creditors in full, though they said it was not a guarantee and had not yet revealed their strategy.

The surprising turn of events raises serious questions about what will happen next. Among them: What does this mean for the lawsuits FTX has filed in an attempt to recover billions in assets the company says it is owed?

Will the possibility that customers can be cured come up at Bankman-Fried's sentencing? Will the possible relief for customers increase its appeal?

Some chargeback cases may become harder to win – or may be dropped. FTX's restructuring lawyers have already filed a dozen lawsuits, including against Bankman-Fried's parents, and they expect to file more. more recovery claims this year. Other high-profile lawsuits include one against K5, an investment firm led by Michael Kives, and against Voyager Global.

Some chargeback cases involve allegations of fraud, but not all. Before fraud claims are argued, there is typically a legal battle over whether a company was insolvent at the time of the investment or whether the investment led to insolvency. If every FTX creditor were paid 100 cents on the dollar, chargeback cases that don't involve fraud would serve no great financial purpose and might be harder to argue, some attorneys say. “In theory, the recoveries could disappear there,” said Eric Monzo, a partner at Morris James who focuses on bankruptcy claims.

A rise in the values ​​of some crypto assets could also affect the math. Creditors wanted the bankruptcy court to calculate their claims based on the current value of assets, rather than when the company collapsed in November 2022 amid a prolonged crypto market collapse. But this week the judge said the debts were linked to the date the company filed for bankruptcy. This gives FTX the advantage of any market increases. For example, Bitcoin was worth about $17,000 when FTX filed for bankruptcy and now it's worth about $43,000, making it a lot cheaper to pay off creditors who claim the value of their lost crypto. FTX made an investment in SpaceX through K5, which has increased dramatically in value.

What about Bankman-Fried's conviction and appeal? It is unclear whether the judge will consider any evidence about the possibility of full payout in sentencing, although in theory this could color his view of the damage caused. What is likely is that Bankman-Fried's attorneys will argue on appeal that the judge was wrong to allow prosecutors to tell jurors that customers had lost their money and to exclude evidence and testimony that suggested customers were recovering. could be. – Andrew Ross Sorkin and Ephrat Livni

IN CASE YOU MISSED IT

Job and wage growth are far exceeding expectations. The U.S. economy added 353,000 jobs last month, nearly twice as many as forecast, and wages rose 0.6 percent from December. Workers found new jobs despite a series of layoffs in the technology sector.

Meta said it would pay its first dividends after reporting huge profits. Profit last quarter at the parent company of Facebook, Instagram and WhatsApp were three times more than the same period in 2022. Meta also announced a $50 billion buyback, prompting one analyst to say the company is “maturing.”

The PGA Tour has raised $1.5 billion from American investors. The funding round was led by Fenway Sports Group, owner of Major League Baseball's Boston Red Sox, and a host of other big names in sports and finance. The deal raises new questions about a tentative agreement between the Tour and the Saudi-backed LIV Golf league, which has not yet finalized an alliance.

Donald Trump would not reappoint Jay Powell as Fed chairman. The former president accused Powell of wanting to cut interest rates to help President Biden, without providing any evidence. Trump said that if he is re-elected in November, he would not support Powell to continue after 2026.

How to fix Boeing

Boeing CEO Dave Calhoun spent most of the company's fourth-quarter earnings report on safety on Wednesday. “We caused the problem, and we understand that,” he said of a Jan. 5 incident that blew a hole through the wall of a 737 Max 9 at 16,000 feet.

DealBook asked experts in corporate culture, aviation and management about radical actions Boeing could take to restore public trust.

Design a completely new airplane. The 737 Max, the workhorse of the Boeing fleet, is the latest version of an aircraft introduced in 1968. “They've added new components, but I think they need an entirely new aircraft design,” said Bill George, former head of medical device company Medtronic and an executive fellow at Harvard Business School. Calhoun has previously said that Boeing wouldn't deliver its next all-new plane until the mid-2030s.

Move headquarters back to Seattle, the heart of the company's technical activities. Boeing moved its base to Chicago in 2001 and then to Washington, DC in 2022. That was a mistake, George said. “Management needs to get back in touch with engineers who understand flight safety,” he said.

Host tech-style product launch events. Ashley Fulmer, who researches trust dynamics in organizations at Georgia State University's Robinson College of Business, said Boeing should communicate more with all its stakeholders. She pointed to the type of major product launch events hosted by tech companies like Apple and Meta as a way Boeing can share information with the public. “I don't think it's enough at this point to aim for no incidents,” she said. “What they need is regular demonstration of their skills, such as innovative design to improve safety and reliability.”

Should Boeing be nationalized? Matt Stoller, research director at the progressive think tank American Economic Liberties Project and author of the monopoly-focused newsletter BIG, recently made the case that this should be the case, noting that the US government already provides a large portion of its revenue helps sell its planes abroad.

But Richard Aboulafia, director of space consultancy AeroDynamic Advisory, said he thought nationalization would be unlikely. He said the government could at least attach conditions for Boeing's management to defense contracts, although there is little precedent for such a move.

“The risk is not bankruptcy; it is management malpractice,” Mr Aboulafia said.

Chris Dixon on why he's sticking with crypto

Chris Dixon has led crypto investing at Andreessen Horowitz since 2013 and manages more than $7.6 billion raised across four crypto-focused funds. In his new book 'Read Write Own' he argues that the next wave of the internet will be built on the blockchain, allowing creators and companies to have direct relationships with their audiences without big corporations in the middle.

DealBook spoke to him about why he's still all-in on the technology. The interview has been shortened and edited.

NFTs felt like a use case for the blockchain that was becoming mainstream. Now most have lost their value. You say that artificial intelligence makes this concept of tokenizing more useful. How?

The technology behind NFTs was standardized in 2020. It's still very early. There were $8.7 billion in NFT sales by 2023. So, you know, still significant for a technology that's four years old.

In a world of generative AI, let's say you're an illustrator, and now AI allows people to get high-quality illustrations just using an application. I think this will happen across all creative categories and in that world I think it's important to explore new revenue streams for creative people.

I compare it to video games, where virtual goods now make up almost half of the industry. For the most popular games like Fortnite, you don't have to pay anything to play the game because there are just too many games. So instead they give the game away for free and charge for virtual goods. That is a groundbreaking model.

Many of the use cases you propose for blockchain – social networks where the user can easily leave with their followers, platforms where musicians can create and sell collectibles – sound exciting. Why are none of these happening in a mainstream way right now?

The first AI article was published in 1943. There was a famous AI investment bubble in the 1980s, believe it or not. And then of course there was ChatGPT.

There were smartphones in the 1990s. And then there was the iPhone.

Having been in the business, I think this is exactly how these things go: you have to invest in them and build infrastructure, build apps and grow them. And you start doing things that maybe a million or five million people get excited about. Then over time, if you're successful, you have a sort of ChatGPT or iPhone moment where it breaks out. And we haven't had that yet with blockchain.

Having poured billions of dollars into crypto, I don't think it's surprising to most people that you would say this is the future.

I would argue that that causality goes the other way. The reason I'm doing this – and not, like a lot of people in Silicon Valley, moving into AI or other areas – the reason I'm sticking with this is because I believe in this.

Quiz: Executive compensation

A Delaware judge on Tuesday rejected a mega-pay package for Elon Musk, prompting the billionaire entrepreneur to announce he would hold a shareholder vote on moving the company's incorporation to Texas. The pay package would have earned Musk more than $50 billion. How much compensation was awarded to Alphabet's Sundar Pichai, the highest-earning CEO of a publicly traded company, in 2022? (The data was collected by the compensation research firm Equilar.)

• $45 billion

• $2.6 billion

• $226 million

You will find the answer at the bottom of this newsletter.

Quiz answer: Pichai's awarded compensation in 2022 was $226 million.

Thank you for reading! We'll see you Monday.

We would like your feedback. Send your ideas and suggestions by email to dealbook@nytimes.com.