Major event in the cryptocurrency circle! FTX bankruptcy restructuring approved, a wave of liquidity is on the way?
FTX's bankruptcy reorganization plan has been approved by the court, and creditors will receive over $12 billion in the coming months, potentially reinvesting in digital assets. FTX has recovered $14.7 billion to $16.5 billion, with 98% of creditors expected to receive 119% repayment. Despite October typically being a strong period for digital assets, the top 100 tokens have dropped by 3% this month. Analysts expect FTX's payout to provide liquidity to the crypto market, but fund distribution will take time, with transfers for smaller creditors starting as early as December
Creditors of the bankrupt cryptocurrency exchange FTX are set to receive over $12 billion in the coming months under a court-approved payment plan, increasing the possibility that some of the cash may be reinvested in digital assets.
Earlier, a U.S. court judge approved FTX's restructuring plan, allowing it to repay creditors for the first time, involving an amount exceeding $14 billion.
In June this year, the bankrupt exchange had $12.6 billion to return to customers, which could reach $16.5 billion after discovering and selling all its assets, as the price of Bitcoin has more than doubled since FTX's collapse, resulting in higher proceeds from asset sales than estimated.
According to information released by FTX, the group has recovered between $14.7 billion and $16.5 billion, while creditors have claimed $11.2 billion. Therefore, under the restructuring plan approved by Judge John Dorsey, 98% of creditors can receive 119% of the reported amount by November 2022. FTX CEO John Ray III stated that the group's goal is to repay all debts and interest to all non-government creditors.
Cryptocurrency traders are now seeking sources of volatility to break Bitcoin and other tokens out of their long-term slump. Despite October typically being a strong period for digital assets, the index measuring the top 100 tokens has fallen by 3% this month, increasing the possibility that the rebound in the crypto market that has been ongoing for a year is losing momentum.
Benjamin Celermajer, Co-Chief Investment Officer at Magnet Capital, stated that the expected FTX payments "are effectively providing liquidity to known cryptocurrency traders. We are likely to see some funds flowing back into the crypto market, potentially providing a price catalyst for markets suffering from a lack of liquidity."
It is worth noting that repayments will not happen immediately; FTX must first establish a trust and hire a company to oversee the fund allocation process.
Galaxy stated that transfers to smaller creditors could start as early as December, while transfers to larger creditors will be completed in the first half of next year. The company mentioned that the remaining claims may take up to three years to resolve.
Research firm K33 estimated in a report that the "potential demand for FTX redistributors" is $2.4 billion, but cautioned that the current impact on the cryptocurrency market may be "moderate" as payments will be phased next year