Since its collapse in November 2022, the compensation progress of bankrupt cryptocurrency exchange FTX has attracted much attention from creditors. According to the latest repayment plan of the restructuring team, the estimated amount owed is US$11.2 billion, but after the assets are sold, there will be approximately US$14.5 billion to US$16.3 billion in cash available for compensation, so the vast majority of users (Those who had held funds under $50,000) were able to receive approximately 118% in cash compensation.
Repayment plan overwhelmingly approved by creditors
In late August, the restructuring team said all classes of creditors had voted to approve its reorganization plan submitted to the Delaware Bankruptcy Court. Unofficial voting reports showed that more than 95% of voting creditors voted in favor of the plan, accounting for 10% of voting creditors. 99% of value.
The announcement further pointed out that the confirmation hearing of the reorganization plan will not begin until October 7, 2024, when the final vote count results will be announced. (After the plan is approved by the court, the repayment process is expected to start within 60 days at the earliest.)
SEC may object to using virtual assets to repay creditors
In addition, in what form will FTX repay creditor assets? According to the current plan of the restructuring team, repayments are to be made in cash or US dollar-linked stablecoins; however, many creditors have previously called on the FTX restructuring team to repay debts in kind, that is, to repay previously lost crypto assets in cryptocurrency.
However, the U.S. Securities and Exchange Commission (SEC) warned FTX in a recent filing that it will reserve the right to question the legality of repaying claims or profiting from “crypto-asset securities.” The document also pointed out that the FTX plan did not clearly state who would be responsible for allocating stablecoins if the relevant terms were approved, which also led the market to believe that the SEC might prevent FTX from making compensation in the form of stablecoins.
Although the SEC did not say whether the above behavior is illegal, the agency said it would reserve the right to challenge:
The SEC does not comment on whether the planned transactions comply with federal securities laws, but still reserves the right to challenge transactions involving crypto assets
In other words, the SEC may have to restructure the team to pay in cash.
FTX compensation became a catalyst, pushing BTC to $120,000
On the other hand, Ash Crypto, a cryptocurrency trader with 1.17 million followers on Twitter, tweeted last month to express his opinion. He believes that FTX’s $16 billion compensation will be related to interest rate cuts, the implementation of US FASB accounting rules and the US presidential election. The factors formed a perfect match and became a key catalyst for the upward trend of the crypto market. As a result, he predicted that Bitcoin would reach $120,000:
Given that most FTX clients are enthusiasts of cryptocurrency investment, a massive $16 billion will enter the cryptocurrency market, which will be the biggest catalyst for price increases.
BTC will exceed $120,000, ETH will exceed $12,000, and many other Altcoin will rise 10-50 times.
Extended reading: Is FTX repayment the key to rescuing the market? Analyst: US$16 billion will be injected to push Bitcoin above 120,000
