A Delaware bankruptcy court has approved FTX’s plan to repay its creditors through cash, with the compensation estimated at $16 billion. This is an important step in resolving one of the most spectacular failures the cryptocurrency market has ever seen.
When FTX finally dropped in 2022, the platform was the number one cryptocurrency exchange, leaving billions hanging in the balance. Under the plan presented, which is expected to be ruled upon by Judge John Dorsey, creditors will see recoveries as high as 118% of their interest-bearing claims.
Cash vs. In-Kind Repayments
Cash payments were pitted against in-kind reimbursement with FTX exchange tokens. Creditor spokesman Sunil Kavuri’s attempt to lobby for in-kind reimbursements did not help modify Judge Dorsey’s decision to order cash payments.
The token of FTX, FTT, which lost nearly all its value, made the court conclude that cash payment would be in the best interest of creditors.
FTX’s implosion was directly related to how its leadership mismanaged funds, none greater than Sam Bankman-Fried, better known colloquially as SBF. Bankman-Fried was convicted of fraud and sentenced to 25 years in prison.
Other executives, like Caroline Ellison and Nishad Singh, negotiated their cases out, with Ellison being released on reduced time. While there were some murmurs about restarting FTX, plans were officially axed by mid-2024.
Crypto Market Aftermath
FTX’s collapse and the announcement of approval for cash repayment caused ripples in the crypto market. While this also made investors move more toward decentralized exchanges with increased scrutiny of centralized exchanges, it did not tear down the crypto market. There is a registered growth through 2024: Bitcoin, Ethereum, and altcoins have noted growth in 2024.
What’s Next For FTX?
As the very chaotic saga of FTX draws to a close, traders have to be ready. The market is still volatile, hence the need to monitor real-time developments as traders look to move into the market ahead of the expected 2024 bull run.
FTX creditors will receive cash repayments, with the end in sight for what was a two-year nightmare. Looking ahead into the crypto world of 2024, market participants enter the new year increasingly buoyant. Led by Bitcoin, Ethereum, and altcoins, investors are positioned for the next big surge of growth.
