TL;DR: At first it appeared that the one million customers that lost their funds with the cryptocurrency exchange were flat out of luck. But some savvy investments, a rigorous clawback effort and the soaring price of Bitcoin have changed the story line.

We all know the sad (scam) story: When FTX’s multibillion-dollar cryptocurrency exchange spiraled out of control and went bankrupt over the course of a matter of days in 2022, investigators quickly discovered roughly $10 billion in customer assets were missing.

As Bankman-Fried awaits his sentencing after being found guilty last November on seven criminal counts, it looks as though what he wrote in a Substack post in January 2023 may be true after all: Specifically, that FTX US “should be able to return all customers’ funds.”

But, how could this be? From the beginning it appeared that the reported one million FTX customers that lost their funds likely had lost them, or at least a good portion of them, forever. While some of the lost money was traced to be wasted in supporting an extravagant lifestyle by Bankman-Fried, another good portion of it was invested – investments that have appreciated significantly in the last two years. There are other factors as well – namely Bitcoin’s remarkable recovery – all of which could mean potential good news for FTX’s customers.

“We currently anticipate that we will have sufficient funds to pay all allowed customer and creditor claims in full,” FTX lawyer Andrew Dietderich told the judge hearing the bankruptcy last week during a hearing.

Bankman-Fried has maintained that a substantial recovery for customers was possible as FTX US was fully solvent and that FTX International had many billions of dollars of assets. He claimed that when the new CEO John Ray III and the Chapter 11 team took over, FTX US had $350 million net cash on hand beyond customer balances and that those funds and customers were segregated from FTX International.

More significantly for the recovery efforts, Ray and his team have collected more than $7 billion clawing back Bankman-Fried’s assets among other efforts. Those efforts included going after the millions given to K5 Global, which invested in companies like SpaceX.

Then there’s the value of Bitcoin which has soared since its darker days of 2022 and is now trading above $47,000. Last September, the bankruptcy team reported that FTX had $3.4 billion worth of digital assets – with about $560 million in Bitcoin. That stash is currently valued at more than $1 billion. The September report also revealed that there was $1.1 billion invested in the Solana cryptocurrency and its price has also spiked by five times.

So the math is looking pretty good for FTX investors. Their only worry is the bankruptcy process itself, which can be unpredictable. As attorney Dietderich told the bankruptcy judge: “there is still a great amount of work and risk” for clients looking to be put whole, but the team has a “strategy to achieve it.”