Crypto:
30604
Bitcoin:
$62.649
% 4.24
BTC Dominance:
%53.6
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Market Cap:
$2.21 T
% 1.97
Fear & Greed:
33 / 100
Bitcoin:
$ 62.649
BTC Dominance:
% 53.6
Market Cap:
$2.21 T

FTX Secures Court Approval to Poll Creditors on Cash or Crypto Repayments

Ftx

As per FTX’s present liquidation strategy, court permission has been granted to ask creditors whether they would like their recovered monies in cash or in cryptocurrencies.

Court Approval and Voting Process

United States Bankruptcy Judge John Dorsey accepted FTX’s voting scheme on June 25. With this consent, FTX may determine creditor preferences about the kind of repayments. Andy Dietderich, FTX’s attorney, said the vote’s goal is to get comments from a larger spectrum of FTX consumers who haven’t yet participated in debt discussions.

Current Liquidation Plan and Creditor Preferences

Calculated at the asset values from November 2022 when FTX filed for bankruptcy, FTX’s May liquidation plan projected a 118% return to 98% of creditors with claims under $50,000, which infuriated some creditors. Nonetheless, many creditors are requesting compensation in cryptocurrencies considering the 165% rise in overall market capitalization after the fall of FTX.

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For example, Bitcoin was valued at $16,900 during FTX’s bankruptcy disclosure but has since jumped 265% to $61,770. Notwithstanding this, FTX attorneys stressed that bankruptcy regulations mandate claims to be appraised at the time of the Chapter 11 filing, in line with the planned cashback schedule. The cash return schedule would also be simpler to follow and would prevent capital gain tax consequences for creditors, the attorneys further pointed out.

Implementation and Future Implications

While Judge Dorsey will rule on October 7 whether to accept the proposal, creditors have until August 16 to vote on it. Since declaring bankruptcy, FTX has recovered $11.4 billion in cash; Dietderich projects this amount to increase to $12.6 billion by October 31 should FTX’s Chapter 11 plan come into force.

READ:  FTX Bankruptcy Aims for Creditor Repayments by End of 2024

Once among the biggest cryptocurrency exchanges worldwide, FTX fell in November 2022 when its trading company Alameda Research stole around $8 billion from millions of users, therefore creating a liquidity crisis. The current CEO of FTX, John Ray, keeps running over bankruptcy. In November 2023 former CEO Sam Bankman-Fried was given 25 years in jail after being found guilty of multiple fraud and money laundering allegations.

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