TLDR:
- A U.S. bankruptcy tribunal has endorsed the FTX liquidation scheme, facilitating a $16 billion restitution for patrons.
- An anticipated initial disbursement of $1.1 billion is likely to fortify the crypto sector.
- Minor creditors might start seeing repayments by December, whereas larger claims could be addressed by mid-2025.
- The entire reimbursement endeavor may extend over a span of three years.
- FTX strategizes to reimburse about 98% of its clientele within 60 days post-plan implementation.
The US bankruptcy court The liquidation strategy has received official approval. The cryptocurrency platform, FTX, is set to commence repaying its customers, utilizing approximately $16 billion in reclaimed funds.
This pivotal decision signals a major advancement in resolving one of the most significant crypto exchange failures in history.
FTX disclosed assets totaling $12.6 billion for customer repayments, with potential growth to $16.5 billion as further assets are liquidated. The initial tranche, estimated at $1.1 billion, is seen as supportive for major digital currencies. Bitcoin , Ethereum , and Solana .
The reimbursement mechanism is gearing up for activation, with smaller creditors potentially receiving funds by year-end. Larger claims are projected for resolution within the first half of 2025. Industry specialists predict the whole process might span three years.
The sanctioned plan envisages FTX refunding 98% of its customers—those with $50,000 or less on account—within two months from the plan's initiation.
FTX estimates customers will recoup at least 118% of their November 2022 account values, aligned with the bankruptcy filing.
The bankruptcy framework relies on various settlements with FTX's users, creditors, U.S. regulatory bodies, and liquidators overseeing FTX's non-U.S. operations wind-down. These settlements prioritize customer restitution over potentially conflicting regulatory claims.
FTX's CEO, John Ray, emphasized the magnitude of this accomplishment, attributing success to the
“dedication and relentless effort of a professional team, who meticulously reconstructed FTX’s financial records and coordinated asset recovery globally.”
The approval comes amid a critical phase for the crypto market, amidst speculation that returned funds might flow back into the digital asset space. Galaxy Digital Holdings' research lead, Alex Thorn, believes these refunds might affect market valuations.
Customer reactions have been diverse. While many are relieved to secure reimbursement, some regret missing out on the recent crypto boom.
Following FTX's November 2022 collapse, cryptocurrency values have soared, with Bitcoin climbing from approximately $16,000 to surpass $63,000.
The bankruptcy case has shed light on FTX’s operational lapses. At the filing, FTX.com held merely 0.1% of the Bitcoin expected by its users, highlighting the complexities of compensating in-kind cryptocurrencies.
During the ongoing legal saga, Caroline Ellison, ex-CEO of FTX’s trading entity Alameda Research, has consented to transfer her assets to the exchange's debtors. This includes liquid assets not seized by the government or used for legal settlements.
