Big news in the cryptocurrency world! FTX is about to pay, here are 5 key information you should pay attention to!
FTX's compensation process has made qualitative progress. FTX will use up to $16.5 billion in assets recovered since the bankruptcy application to compensate bondholders.
You must be clear about the following 5 key points:
1. Content of the bankruptcy plan
The team led by John J. Ray proposed it on May 7 this year, and it was approved to enter the voting stage on June 25 and officially passed on October 7. The plan is to use the recovered assets to compensate customers first, and then pay potential competitive claims from government regulators.
2. The significance of the plan's approval and the effective time
After approval, FTX will compensate 98% of users within 60 days after the plan takes effect. However, the approval of the plan does not mean that it will take effect. The expected effective date may be October 31, or it may be delayed to early 2025 due to the motion to set up a compensation reserve.
3. Users and compensation funds for advance compensation
Users for advance compensation: 98% of users are calculated backwards, covering customers who held $50,000 or less in the exchange when FTX went bankrupt.
Total compensation funds: The total value of assets recovered, converted into cash and available for distribution is expected to be between $14.5 billion and $16.3 billion.
Compensation method: There will be no one-time full compensation. It is expected that 98% of users (users with claims less than $50,000) will be compensated approximately $1.1 billion in advance this year, and the remaining amount is expected to be paid between the first and second quarters of 2025.
Compensation standard: Compensation will be paid in cash based on the dollar value of the claims at the time of bankruptcy in November 2022. 98% of creditors are expected to receive a compensation ratio of 118%; the remaining creditors will receive 100% compensation ratio and time value compensation.
4. Creditor group attitude
About 94.48% of creditors voted in favor of the plan, with a total claim value of approximately $6.83 billion. However, some creditors, including representatives of FTX's largest creditor group, objected and hoped to pay directly in coin, arguing that the coin price has risen, and compensation in US dollar value will shrink and may face huge taxes.
5. Return of compensation funds
Considering that FTX's related claims have been circulated in the market and a large number of original creditors have traded their claims, it is expected that it will be difficult for funds to return. Well-known creditors expect that the proportion may reach about half, but even if some funds return, it may boost the market.