FTX’s $16B Payout: Catalyst for New Crypto Bull Run or Creditor Disappointment?

KEYTAKEAWAYS

TABLE OF CONTENTS

• KEY TAKEAWAYS
• INTRODUCTION
• KEY TIMELINE FOR COMPENSATION
• THE $16B BUYING POWER STILL FACES UNCERTAINTIES.
• CONCLUSION
• DISCLAIMER
• WRITER’S INTRO

CONTENT

Find detailed information about FTX’s imminent $16B compensation plan, its potential impact on the crypto market, and creditors’ concerns with CoinRank. Learn key dates, payout details, and how it could spark a new bull run.

INTRODUCTION

The collapse of FTX, the fastest-growing crypto exchange unicorn in crypto history with daily peak trading volumes exceeding $6.6 billion and a total token market cap of $26 billion, accelerated the end of the previous bull market. As FTX begins compensating investors, another round of a crypto bull market is likely to be triggered.

According to an official email, FTX liquidator PwC has released an update on the liquidation process. Customers of FTX or FTX International are entitled to file claims in either the Bahamas or U.S. proceedings. At this stage, if the bankruptcy protection plan is approved, customers are expected to receive between 119 and 143 cents per dollar claimed.

For customers who have submitted proof of debt claims in the Bahamas proceedings, FTX will contact them in the future to confirm whether they wish to continue managing, processing, adjudicating, and resolving claims in the Bahamas. Customers who have not yet submitted proof of debt claims in the Bahamas process can submit claims before the deadline, currently expected to be mid-August 2024.

Public information shows that FTX plans to distribute over $16 billion to its creditors. Key dates are as follows:

1. August 16: Deadline for FTX customer voting;
2. October 7: Judge Dorsey will decide on plan approval.

After court approval, FTX will repay creditors within two months, with the specific implementation period being Q4 2024 to Q1 2025. The repayment event, along with factors such as interest rate cuts and the U.S. election, will bring more positive factors to the crypto market at the end of the year. Given that most FTX customers are cryptocurrency enthusiasts, the $16 billion in funds will enter the cryptocurrency market and catalyze price increases.

KEY TIMELINE FOR COMPENSATION

PS: There are some uncontrollable factors in the compensation process, such as creditors’ questioning of the compensation plan. The main point of contention is whether compensation should be in fiat currency or tokens.

1. Email sending deadline: July 10 (passed) The last date for debtors to send voting packages and related documents to creditors, ensuring all relevant parties receive the necessary information in time to vote on the plan or raise objections.
2. Rule 3018 motion submission deadline: July 16 If creditors request temporary allowance or changes to their voting rights, they must submit motions by this date. This resolves disputes before formal voting, ensuring fairness and accuracy of the vote.
3. Plan supplement document submission deadline: August 9
4. Confirmation objection submission deadline: August 16
5. Voting deadline: August 16, 4:00 PM (Eastern Time) All votes must be properly executed, completed, and delivered by this date.
6. Voting report deadline: 7 days before the confirmation hearing
7. Deadline for replying to confirmation objections: 7 days before the confirmation hearing
8. Proposed date for confirmation plan hearing: October 7, 10:00 AM (Eastern Time) [Tentative] Date of the court hearing to consider confirming the reorganization plan.

THE $16B BUYING POWER STILL FACES UNCERTAINTIES.

Recently, lawyers responsible for overseeing FTX’s bankruptcy case submitted a reorganization plan that would fully compensate almost all customers and provide an additional 18% interest. If most creditors and the bankruptcy judge agree to the plan, compensation will be distributed within two months. However, creditors have expressed dissatisfaction and concerns about the following aspects:

Creditors’ Dissatisfaction with the Reorganization Plan

Some creditors are dissatisfied with the reorganization plan because they cannot retrieve their original cryptocurrencies from the exchange. Instead, they will receive compensation in dollars based on the value of the cryptocurrencies held by FTX when it filed for bankruptcy in November 2022. Many believe this causes them to miss out on profit opportunities, as cryptocurrency prices have risen since then.

Creditors Accuse FTX of Selling Assets at Low Prices

Creditors also accuse FTX of selling some assets at low prices before bankruptcy, such as the crypto derivatives platform LedgerX and a large number of SOL tokens. They believe these transactions harmed creditors’ interests and demand an investigation into the relevant personnel.

Creditors Question FTX 2.0 Plan

Some creditors believe that if FTX had decided to restart its trading platform, it could have gained hundreds of millions of dollars in additional value. However, FTX stated that they explored the possibility of restarting but couldn’t find any willing investors.

Creditors Concerned About Unpursued Claims

Creditors are also worried that FTX may not have pursued all deserved claims, such as claims against Binance. FTX says they are still investigating and filing lawsuits but haven’t made a final decision regarding matters related to Binance.

Reorganization Plan Faces Opposition

In addition to the above issues, some creditors have objected to certain terms of the reorganization plan, such as the distribution method and governance structure. They believe the plan is too favorable to FTX’s management team and lacks oversight for creditors.

CONCLUSION

It has been two years since FTX’s collapse, and although investors will receive compensation of nearly 1.18 times the nominal value, they have also paid a huge cost in time and energy. While creditors assert their rights, they should also realize that since most assets have been liquidated, FTX’s remaining USD-based assets have lost the potential to achieve high returns in a bull market.