FTX: Major Ruling Clears $16 Billion Repayment Route In Bankruptcy Saga

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As a seasoned researcher who has closely followed the tumultuous journey of FTX, I find myself both relieved and perplexed by this latest development. Relieved because the approval to repay customers offers a glimmer of hope for those who have been waiting since 2022. However, my skepticism arises from the complexities surrounding the payout schedule and the ongoing dispute over the $1 billion seized assets.

Previously prominent crypto exchange FTX has successfully navigated a significant milestone in its bankruptcy process. On Monday, a US court gave the green light to its strategy for refunding customers utilizing up to $16.5 billion in recovered assets. This approval represents a victory for FTX’s attempts to rectify the issues that led to its downfall.

In simple terms, Judge John Dorsey, leading the proceedings, commended FTX’s bankruptcy resolution as an exemplary model for managing intricate Chapter 11 applications. This approval brings optimism to numerous FTX customers who have been eagerly anticipating the return of their assets since 2022.

FTX APPROVED TO REPAY CUSTOMERS AMID BATTLE FOR $1 BILLION SEIZED ASSETS

A U.S. judge has given the go-ahead to a repayment strategy for FTX, enabling them to return approximately $12.6 billion to customers whose digital assets were frozen on the platform after its fall in November 2022.

– FTX is in talks to…

— BSCN (@BSCNews) October 7, 2024

The Payback Schedule: A Complicated Package For Clients

Approximately 98% of FTX account holders with balances under $50,000 will receive payment via this settlement, beginning 60 days after activation. However, not everyone is content because the payout amounts are calculated based on cryptocurrency prices from November 2022, which coincidentally was when FTX experienced a collapse. As a result, some customers feel they’re receiving an unfair deal due to the timing and value of their assets during that period.

FTX: Major Ruling Clears $16 Billion Repayment Route In Bankruptcy Saga

At the given point in time, Bitcoin was worth approximately $16,000. Nowadays, its value has surged far beyond $63,000. A group of consumers, supported by lawyer David Adler, argue that considering today’s high values of cryptocurrencies, FTX’s claim of a 100% return doesn’t accurately reflect their losses. However, FTX maintains that since founder Sam Bankman-Fried mishandled those assets, it’s not practical to simply repay cryptocurrency deposits in kind.

The Part Bankman-Fried Played And What FTX Acquired

The significant downfall of FTX can largely be attributed to Sam Bankman-Fried’s actions. Earlier this year, he was sentenced to a 25-year prison term due to his practice of using customer funds to support risky investments made by his hedge fund, Alameda Research. When FTX filed for bankruptcy, it was found that only around 0.1% of the bitcoin believed by its users to be in their possession was actually held by the company.

Since taking over, the new leadership at FTX has been relentlessly working to locate misplaced assets. So far, they’ve managed to recover approximately billions of dollars worth of cryptocurrency and cash. Some of these funds came from the sale of equity in companies like AI firm Anthropic. This recovery effort allowed FTX to estimate that it could repay creditors anywhere between $14.7 billion and $16.5 billion.

A Win For Some, But There’s Still Dissatisfaction

Despite the positive outcome of the reversal, there are still unresolved matters at hand regarding the $1 billion confiscated in connection with Bankman-Fried’s criminal investigation. As of now, FTX and the US Department of Justice have not come to an agreement on most points. The confiscated funds may potentially provide up to $230 million for the shareholders, who would otherwise receive nothing from a bankruptcy.

Despite the advancements, some clients express feelings of being left behind in the recent surge of cryptocurrency values. Following the market’s dip in 2022, the worth of cryptocurrencies has soared significantly. Beyond losing funds, many individuals suffered a missed opportunity to generate income when the market rebounded, as they were affected by FTX’s collapse.

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2024-10-08 20:42