TLDR
- U.S. court gives nod to FTX's restructuring scheme
- Creditors to get back 119% of recognized claims in liquid assets
- FTT token surged 50% to $3.23, later settled at $2.72
- Judge Dorsey declares the FTT token has lost all its market value
- FTX sets the stage to hand out between $14.7 billion and $16.5 billion to fulfill creditor claims
On Monday, a major milestone was reached in the FTX bankruptcy proceedings as Judge John Dorsey of the U.S. Bankruptcy Court endorsed the exchange's Chapter 11 restructuring blueprint.
This pivotal decision advances the closure of FTX’s prolonged bankruptcy saga, sparked by its downfall in November 2022.
The sanctioning of this roadmap provides a means to settle FTX's creditor dues entirely, utilizing around $16 billion from recovered estates.
Under the plan, a vast majority – 98% of creditors – is slated to get roughly 119% of their validated claims back within two months of the plan's activation, which includes both principal and accrued interest.
The collective sum earmarked for payouts is projected to range from $14.7 billion to $16.5 billion.
The funds have been collated through various channels, such as asset liquidation, input from global branches, and collaboration with governmental entities.
John J. Ray III, who steers FTX as CEO and Chief Restructuring Officer, commended the dedication that culminated in this achievement.
He underscored the exhaustive efforts of the professional team that meticulously reconstructed FTX's financial dossiers and recuperated billions in global assets.
The endorsement of the bankruptcy scheme had an immediate ripple effect on FTX’s proprietary token, FTT. Shortly after the court's affirmation, FTT's value shot up by over 50%, peaking at $3.23. It eventually steadied around $2.72, based on reports from CoinGecko.
Despite this upturn, it's essential to acknowledge that Judge Dorsey affirmed in court that the FTT token essentially holds no intrinsic value at present.
The reorganization proposal received overwhelming backing from the creditors, with a robust 94% casting affirmative votes. This group accounts for around $6.83 billion in claims. Such a high endorsement likely bolstered the court’s resolution to ratify the plan.
While the exact rollout date remains undefined, Ray noted that the estate is engaging specialized agents to guarantee the secure and streamlined distribution of repayments to creditors spanning over 200 territories. This indicates the intricacy of the worldwide disbursement journey.
FTX’s bankruptcy narrative is rooted in its catastrophic crash towards the end of 2022, which reverberated throughout the digital currency domain.
Investigations unveiled the firm's diversion of client assets for high-risk ventures, culminating in criminal indictments against pivotal corporate members.
Former FTX CEO Sam Bankman-Fried was found guilty on various charges of deception and conspiracy, resulting in a 25-year incarceration.
Bankman-Fried has since pushed forward with an appeal against his judgment. Meanwhile, other senior figures, such as Caroline Ellison, previous head of Alameda Research (FTX's affiliate), also faced judicial repercussions. Ellison was penalized with a two-year imprisonment and mandated to cede $11 billion.
The sanctioning of FTX’s reorganization framework symbolizes a landmark advancement within the crypto sphere in addressing the fallout from one of its most spectacular debacles.
This development carves a pathway for creditors to reclaim their funds, potentially revitalizing confidence in the larger crypto infrastructure.
With the plan now transitioning into its practical phase, the focus will be on the repayment mechanism. Delivering on creditor settlements successfully could lay groundwork for managing similar bankruptcies in the cryptocurrency ecosystem in the future.
