FTX has started repayments! FTX's collapse has become one of the most serious failures in cryptocurrency history due to the exchange's inability to maintain sufficient reserves to cover user funds.
Therefore, the exchange is required to provide a 'Proof-of-Reserves' (PoR) to allow stakeholders to verify the actual user funds held by the exchange.
FTX is estimated to have up to 14.5 billion to 16.3 billion USD in cash for repayments. The initial repayment allocation is limited to creditors in the 'convenience category' in the restructuring plan.
The convenience category refers to creditors with claims of 50,000 USD or less, and these investors account for over 90% of all creditors in the FTX bankruptcy case, who are expected to recover 118% of their claim value in USD. The allocation date for claims in other categories will be announced later.
FTX repayments are calculated based on the USD price of cryptocurrencies on the day FTX exercised Chapter 11 of the bankruptcy law on November 11, 2022.
Simply put, what you get back is calculated based on the price of stablecoins, which is commonly referred to as USDT-pegged, rather than coin-based!
Although FTX expects that the vast majority of creditors (those claiming 50,000 USD or less) will recover 118% of their claim value in USD, it is still a blood loss!
Bitcoin has surged over 500% since FTX's bankruptcy.
Taking Bitcoin as an example, when FTX filed for bankruptcy protection, the BTC price was only about 16,000 USD, but now the Bitcoin price has soared to about 98,000 USD. This means that if the creditor held one Bitcoin at FTX at that time, they might only get back 16,000 USD, which is about 16% of the current price, making it a huge loss. (Even if you get 118%, it’s still a blood loss!)
Do not have misconceptions about FTX repayments!!!
The news of FTX's upcoming repayments is a huge positive for the cryptocurrency market. FTX will start repaying creditors 16 billion USD from January 3rd, and during this process, you need to fill out a registration form. If you don’t register within six months, you won’t be compensated later!
FTX's repayments will not start until January 3rd. The first repayments are expected to wait until February to March 2025, and only for 'convenience category' creditors, totaling 1.2 billion USD.
For creditors with claims exceeding 50,000 USD, a total of 10.5 billion USD will be paid later. He further pointed out FTX's total asset overview:
Cash reserves: 13 billion USD
Venture capital portfolio and litigation gains: expected to be between 5 billion and 7 billion USD:
About 50% of the debts have been acquired by debt buyers, but these buyers are not interested in crypto assets, which may reduce the likelihood of funds flowing back into the crypto market.
At that time, many institutions acquired part of FTX's debts at a discount, which means some liquidity flowed into the hands of institutions. However, regardless, the FTX situation has slowly come to an end over the years, and at least there are compensations, which is better than nothing!
This is also a positive for the crypto circle, at least from the current perspective, liquidity has increased to some extent!
For the bankruptcy sector: FTT, LUNA, LUNC, USTC are worth paying attention to!
The cryptocurrency circle is both a stage for human nature games and an arena for the clash of beliefs and strategies. Every fluctuation is a selection and reshaping, eliminating the blind followers and leaving those who truly understand market rules.
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