The restructuring team of the bankrupt cryptocurrency exchange FTX submitted its final voting results to the Delaware Bankruptcy Court at a "confirmation hearing" on October 7, Eastern Time, and obtained approval of the plan from Judge John Dorsey earlier.
Small creditors with claims of less than $50,000 are expected to start receiving compensation by the end of 2024, while creditors with larger claims may have to wait until the first or second quarter of 2025. (Details such as the effective date of the subsequent payment plan and the expected start of distribution are subject to separate announcements from the bankruptcy estate administration, which was previously estimated to take two months.)
Judge John Dorsey said:
I want to say congratulations... This is a classic example of how to handle a very complex Chapter 11 bankruptcy.”
How much compensation can creditors receive?
Depending on the type of claim made by the creditor, the vast majority of customers (those holding less than $50,000) will receive approximately 118% of their losses, and some creditors will receive 142% of their losses.
According to the reorganization plan FTX filed with the Delaware Bankruptcy Court in May, the company estimates that it will have as much as $14.5 billion to $16.3 billion in cash available for distribution once all asset sales are completed.
Creditors are dissatisfied with the calculation based on the price at the time of bankruptcy
However, it should be noted that future compensation for losses is calculated based on the U.S. dollar price of cryptocurrency on the day FTX exercises Chapter 11 of the Bankruptcy Law on November 11, 2022, so unless the assets placed by the user in FTX are stablecoins, it is actually still a big loss.
For example, when FTX filed for bankruptcy protection, the price of Bitcoin was only about $16,000, but the current price of Bitcoin is close to $64,000. That is to say, if a creditor held one Bitcoin in FTX at the time, he might only get back $16,000 in the end, which is only a quarter of the current price.
In this regard, Sunil Kavuri, a representative of FTX creditors, has repeatedly criticized that many creditors are disappointed and even dissatisfied when they can actually only get "10% to 25% of the value of their cryptocurrency."
FTT jumped 8%
What is puzzling is that although the potential FTX exchange restart had confirmed in January this year that "no investor plans to invest funds to restart FTX", the judge also added: "Because the debtor will not resume the exchange, there is no basis for the token to appreciate..."
But the price of FTT still jumped after the news came out. According to CMC data, FTT is now quoted at $2.64, with an increase of nearly 8% in the past 24 hours and an increase of more than 110% in the past month. However, the dynamic zone would like to remind you that FTT currently seems to be more like a meme coin, so please be careful of the risks.
Up to $16 billion paves the way for Bitcoin's surge?
It is worth noting that if FTX does return approximately $14-16 billion to creditors in the fourth quarter of this year, it may bring a large amount of new capital to the cryptocurrency market, and the future market is worthy of our attention.
As for the price of Bitcoin, after it hit $64,466 last night, "selling pressure emerged" and it fell to a low of $62,126 around 7 a.m., a reversal of 1.8% in the past 24 hours.
