The restructuring team of bankrupt cryptocurrency exchange FTX announced last month that creditors had voted to approve its repayment plan. The FTX liquidation team will file a petition with the U.S. Bankruptcy Court in Delaware before a confirmation hearing scheduled to begin on October 7. After the final voting results are submitted and the plan is approved by the court, the repayment process is expected to start within 60 days at the earliest.
According to the current plan of the restructuring team, FTX will repay creditors in cash or U.S. dollar-pegged stablecoins. It is estimated that after all asset sales, the company will have as much as $14.5 billion to $16.3 billion in cash available for distribution, while it owes approximately $11.2 billion to customers and other non-governmental creditors.
Therefore, officials stated that the vast majority of users (those who had held funds below $50,000) were able to obtain approximately 118% cash compensation.
Some creditors can only recover 10-25% of the value
However, it is important to clarify that the loss compensation is calculated based on the platform funds on the day FTX exercised Chapter 11 of the Bankruptcy Law. Therefore, unless the assets placed by users on FTX are stable coins, it will actually still be a big loss...
For example, when the bankruptcy filing was filed, the price of one Bitcoin was only about $16,000, but the current price of Bitcoin is close to $66,000, which means that if you had a BTC in FTX at the time, you might only get it back in the end. $16,000, less than 25% of current price.
For this reason, FTX creditor Sunil Kavuri expressed strong anger over this repayment plan, saying that many FTX customers suffered from mental distress, panic attacks, divorce and even suicidal thoughts because their life savings were stolen and their property was not repaid.
Reorganization plan faces challenges
In fact, Sunil Kavuri and his followers are not the only opponents of the FTX repayment plan. In August 2024, a U.S. trustee responsible for overseeing the bankruptcy proceedings also questioned the FTX restructuring plan, believing that the plan was an FTX restructuring. Too much legal protection is provided to the team’s managers and representatives.
The U.S. Securities and Exchange Commission (SEC) has previously stated that it may oppose FTX's restructuring plan if it chooses to use stablecoins to repay customers. Regardless, further answers are expected on October 7th.
Can FTX repayment become a cash source in the fourth quarter?
If all goes well, the TX bankruptcy proceedings are expected to inject significant capital into the market in the fourth quarter. Forbes analysis predicts that the total amount of creditor distributions may be as high as US$16 billion, which is expected to add a bullish outlook to the fourth quarter trend of the currency market. The report also pointed out that since most compensation will be paid in US dollars, most of which is expected to return to the market, Bitcoin is expected to receive the greatest boost.
