In a significant legal breakthrough, the Delaware bankruptcy court has officially approved FTX's customer refund plan. The once-dominant crypto exchange, which collapsed in November 2022, will now move forward with refunding its users 100% in fiat currency. Here’s everything you need to know about the decision and its impact on customers. 👇

💼 The Approved Refund Plan

On Monday night, the court gave the green light to a plan that aims to repay 98% of FTX customers between 118% and 140% of their deposited funds. This refund, however, comes with a key catch: it will be based on the November 2022 value of their assets, not their current worth. 💰

  • Refund in Fiat Currency: All repayments will be made in fiat, meaning no crypto will be distributed.

  • Processing Timeline: Payments are expected to be issued within 60 days after the plan is fully in effect, though the exact date is yet to be determined.

📉 Why the November 2022 Valuation Matters

The repayment amount is calculated based on asset values from November 11, 2022, the day FTX declared bankruptcy. At that time, Bitcoin was hovering around $17,000. So, while the plan includes a bonus of up to 140% of initial deposits, many customers may still find their refund to be significantly lower than the current value of their holdings. With Bitcoin now trading above $27,000, customers will see roughly 25% of their asset's current value. 🪙⚖️

🛑 Six-Hour Hearing & Customer Objections

The approval didn’t come without challenges. During the lengthy six-hour hearing, two main objections were raised:

  1. Fiat vs Crypto Refund: Many argued for refunds to be made in crypto rather than fiat, allowing customers to benefit from the recent market gains.

  2. FTT Token Valuation: The value assigned to FTX’s native token, $FTT , was another point of contention. The court ruled that FTT has zero nominal value, as it no longer holds any utility since FTX is no longer operational.

Despite these objections, the court stood by the fiat repayment plan and confirmed FTT as effectively worthless. 🏛️❌

🚀 FTT Token’s Rollercoaster Reaction

Interestingly, following the court’s decision, the FTT token saw a sharp rise of 70%, jumping from $2 to a peak of $3.4, before stabilizing back below $2.5. While FTT is now practically useless, speculators drove the price up temporarily, reflecting the volatile nature of the crypto market. 📈🔥

🔄 Stablecoin Refunds? Still Under Review

One intriguing option discussed during the hearing was the potential for customers to receive refunds in stablecoins instead of fiat. This option, however, remains under consideration due to concerns raised by the U.S. Securities and Exchange Commission (SEC). Further discussions will determine whether stablecoin payouts could be a viable alternative for FTX’s creditors. 💬🔗

🛠️ What Made the Refund Possible?

The ability to offer such high refund rates is largely due to the recovery efforts by FTX’s liquidators, who successfully retrieved a large portion of the exchange’s assets. Additionally, the rise in value of assets held by FTX and its sister company, Alameda Research, played a crucial role in making these refunds feasible. 🔍📊

🎯 What’s Next for FTX Customers?

With the plan now approved, the focus shifts to ensuring the timely execution of payments. Customers can expect the process to start within 60 days once the plan is fully set into motion. While the refunds in fiat currency might not fully reflect the current value of their crypto holdings, the resolution brings closure to many users who have been waiting for nearly two years.

FTX’s saga has been a cautionary tale for the crypto industry, highlighting the importance of trust, transparency, and responsible financial management. 🏦🔑

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