FTX Trading and its affiliated debtors today filed their anticipated amended plan of reorganization.
- 98% of creditors receive at least 118% of allowed claims within sixty days of effectiveness, others get billions in compensation.
- Plan would resolve disputes with government and private stakeholders without costly and protracted litigation.
- FTX creditors receiving their investment back could mean massive liquidity injection into crypto markets, FTT rises a fraction.
FTX exchange has shared a compensation plan for its customers and creditors. Though still pending bankruptcy court approval, execution of the plan could mean massive liquidity for the industry.
Also Read: Solana price dumps 21% on week as round three of FTX estate sale of SOL commences
FTX shares creditor compensation plan
FTX has filed a consensus-based plan for its reorganization, coming almost two years (nearly 17 months) after the now defunct FTX filed for Chapter 11 Bankruptcy Protection in the District of Delaware.
Thanking every stakeholder and expressing intention to “return 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of FTX, said:
On behalf of FTX's independent Board of Directors, I want to extend our deepest appreciation[ …]Finally, I want to thank all the customers and creditors of FTX for their patience throughout this process.
The plan has two key highlights for its customers and creditors:
- “98% of FTX creditors to receive at least 118% of allowed claims in cash within 60 days of effectiveness.
- Other creditors to receive 100% of allowed claims plus billions in compensation for the time value of their investments.”
The plan would resolve disputes with governmental and private stakeholders without costly and protracted litigation.
Subject to being finalized and approved by the Bankruptcy Court, the plan details how the exchange intends to distribute to customers and other creditors “virtually all of the assets associated with FTX at the time of its collapse in November 2022.” This means they will be compensated at 2022 crypto prices regardless of the price of the assets now.
In this contemplation, FTX is working with between $14.5 and $16.3 billion. This comprises totals of property collected valuation, converted to cash and available for. Specifically:
- Assets under the control of the chapter 11 debtors.
- Assets under the control of the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, the Joint Official Liquidators of FTX Australia, the United States Department of Justice and dozens of private parties that have cooperated in the recovery efforts.
Bloomberg says FTX has amassed billions of dollars more than it needs to cover what customers lost in its November 2022 collapse. This positions the firm to receive full recoveries under the company’s bankruptcy.
Creditors receiving their payouts would be bullish for crypto in general, as it would signify a lot of liquidity in the market.
When FTX creditors receive their $ back
— CRG (@MacroCRG) May 7, 2024
That's gonna be one hell of a liquidity injection into the market eh
In the immediate aftermath of this news, FTX token FTT rose by almost 2% to trade for $1.66 at the time of writing.
FTT/USDT 2-hour chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
![Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Ethereum/Ethereum_Coins_31_03_XtraSmall.jpg)
Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle
Ethereum is up 0.5% on Thursday following a recent analysis showing that the top altcoin lost its "ultra" sound money narrative. Meanwhile, ETH ETFs recorded net inflows for the first time after nine days of consecutive outflows.
![Solana bears dominate market as SunPump has potentially led to less demand for SOL](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Solana/Solana_Crypto_31_XtraSmall.jpg)
Solana bears dominate market as SunPump has potentially led to less demand for SOL
Solana is down 2.5% on Thursday following bearish signals across its funding rate and total fees captured. SOL's weak performance could also be linked to the declining traction seen in its meme coin generation platform Pump.fun.
![AI tokens see narrow gains as Wall Street banks raise price targets on NVDA](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/PEPE/PEPE_coin_2_XtraSmall.jpg)
AI tokens see narrow gains as Wall Street banks raise price targets on NVDA
AI tokens NEAR, ICP, RENDER and TAO briefly traded in the green on Thursday following Wall Street banks' positivity toward Nvidia's earnings report. While a correction followed, these tokens could rally if NVDA meets expectations.
![XRP back above $0.57 even as Ripple traders take $8 million in profits](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptos_XtraSmall.jpg)
XRP back above $0.57 even as Ripple traders take $8 million in profits
Ripple (XRP) traders have consistently taken profits on their holdings in the last two weeks, per Santiment data. Once again, traders have grabbed $8.36 million in profit so far on Thursday. Typically, profit-taking negatively influences the asset as it increases the selling pressure.
![Bitcoin: Will BTC continue its ongoing decline?](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_5_XtraSmall.jpg)
Bitcoin: Will BTC continue its ongoing decline?
Bitcoin (BTC) trades above $59,000 on Friday, but it has lost 7.5% this week so far after being rejected around the daily resistance of $65,000. The decline is supported by lower demand from the US spot Bitcoin ETFs, which registered a net outflow of $103.8 million, falling Bitcoin's Coinbase Premium Index, and a spike in Network Realized Profit/Loss. However, some investors seem to be taking the chance to buy BTC amid this price dip, as shown by the Exchange Netflow data.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.