As a seasoned crypto investor who has weathered numerous market storms and witnessed the rise and fall of several digital exchanges, I find myself both hopeful and skeptical about FTX’s recent settlement with Bybit. The potential recovery of assets is undoubtedly a positive step towards repaying creditors, but the ongoing legal battles and complexities surrounding the exchange’s downfall leave me cautiously optimistic.
In their ongoing mission to retrieve funds for creditors following its downfall in 2022, the now-defunct cryptocurrency exchange FTX – previously overseen by Sam Bankman-Fried who was later convicted at age 25 – has struck a deal with UAE-based crypto platform Bybit. This agreement permits FTX to withdraw assets as part of a $228 million settlement.
FTX To Recoup Funds From Bybit
As per a report by Bloomberg, FTX is planning to withdraw its lawsuits against Bybit Fintech Ltd. and associated parties. They have asked for approval from the U.S. Bankruptcy Court in Delaware to seal this deal, following several rounds of talks over many months.
As per the agreement, FTX will recoup around $175 million worth of digital assets from Bybit. In return, Bybit’s investment arm, Mirana Corp., will purchase approximately $53 million worth of BIT tokens from FTX.
The legal dispute stemmed from allegations that Mirana had withdrawn $327 million in assets from FTX just before the exchange’s collapse, utilizing “special privileges”. At the same time, other users struggled to access their funds.
In the terms of the agreement, individuals who withdrew funds close to when FTX declared bankruptcy can put forward creditor claims equating to 75% of their account balances at the time of filing. According to FTX, this setup results in “substantial financial benefits” for the estates managing the debts.
Through the Settlement Agreement, the parties involved (Debtors) are optimistic about getting back almost all of what they aim to retrieve.
The firm underscored the point that this contract is crucial in ensuring substantial restoration for shareholders, as it bypasses the expenses and unpredictability tied to prolonged legal battles and possible compliance difficulties in foreign jurisdictions.
Under the leadership of FTX’s newly appointed CEO, John J. Ray III, one of several arrangements has been reached. This settlement was made after he took charge following the exchange’s collapse. Earlier this month, the court sanctioned its liquidation scheme to return at least $12.6 billion to customers whose funds were frozen on the platform.
Creditor Payouts Expected By Early 2025
Previously mentioned by Bitcoinist, Judge John Dorsey of the US Bankruptcy Court has given the green light for a restructuring plan aimed at returning funds to creditors, which comes close to the two-year anniversary since FTX’s downfall.
As a researcher, I’ve been tracking this development closely, and my latest projections suggest that creditor payments may begin around the latter half of Q4 2024, extending into early Q1 2025. Importantly, these payments are expected to be made within approximately two months (60 days) from the court’s effective date announcement, which is tentatively set for mid-November.
Experts believe that Bitcoin’s (BTC) price might increase due to these advancements since the money could flow back into circulation. Yet, a substantial amount of the potential funds—ranging from approximately $14.4 billion to $16.3 billion—has already been acquired by credit funds. This reduces the chances that these assets will be resold and thus re-entered into the market.
Additionally, it’s estimated that around a third of the outstanding claims involve assets linked to entities and individuals under sanctions, who lack adequate Know-Your-Customer (KYC) checks. Consequently, it seems challenging to recover these assets.
Based on the characteristics being considered, experts predict that between 20% and 40% of the remaining $8 billion could possibly return to the market. This assumption is tied to the type of traders on FTX, who are predominantly experienced, high-risk investors with a strong background in cryptocurrency.
At the time of writing, the exchange’s native token, FTT, is trading at $1.80.
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2024-10-29 13:42