- FTX proposed a new plan in which 98% of its creditors would receive 118% of their claims
- Other non-government creditors will receive back 100% of their claims, plus up to 9% interest
- Payments will be received within 60 days of approval by the Delaware Bankruptcy Court
The collapse of the FTX exchange was undoubtedly one of the most notorious events in crypto and undermined investor confidence like nothing else.
Even though two years have passed, we still hear the echoes of this collapse today. However, this time, there are good echoes, as FTX is going to take full responsibility and compensate for the losses.
Let’s Get to the Numbers
According to a Tuesday press release from FTX, after a year and a half of collecting and liquidating the company’s scattered assets around the world, the company expects to have between $14.5 billion and $16.3 billion of available cash.
These funds will be distributed as follows:
98% of creditors will receive 118% of their claims back.
Non-government creditors will receive back 100% of their claims, plus up to 9% interest, as compensation for the time value of their investment.
These funds must be paid within two months, from October through November, subject to presumptive approval by the Delaware Bankruptcy Court.
FTX also expects the new plan to help handle the issues with regulators such as the Internal Revenue Service (IRS) and the US Commodity Futures Trading Commission (CFTC).
The IRS has expressed its willingness to resolve its $24 billion in claims in return for a $200M cash payment and a $685M subordinated claim, which will be paid only after all creditors and other government entities have been paid.
The CFTC and other government claimants have also expressed willingness to subordinate their claims after FTX pays users and investors full interest.
What Conclusion Can We Draw From This?
First, it is good when there are powers capable of forcing companies to comply with their obligations, especially if these companies have caused financial harm to individuals and reputational damage to the entire industry.
Secondly, it is a little paradoxical to see justice on the part of those powers, some of which can greatly slow down the development of this very industry. However, apparently, sometimes things can work the way they should.
And finally, how will creditors manage such a sudden and large influx of funds? Let’s say some will refuse investments based on bad experiences, but some will try to realize the lost opportunity due to funds hanging on FTX. Whatever this part is, it will be a huge flow into crypto, which should probably greatly increase the prices of all crypto assets.
We will closely monitor the court decision and subsequent compensation, their transparency and completeness, and probable further movement.
