A significant development occurred in the ongoing Chapter 11 case of cryptocurrency exchanges FTX and FTX.US, shining a light on potential solutions for creditors. An announced proposal on October 17 represents a noteworthy step towards compensating customers and resolving disputes over customer assets.
The proposed settlement has emerged after extensive discussions involving FTX debtors and multiple stakeholders, including the unsecured creditors’ committee and a committee representing non-United States customers. If approved by the bankruptcy court, this settlement has the potential to restore more than 90% of assets to both FTX and FTX.US customers by the end of the second quarter of 2024.
A significant aspect of this settlement involves the “shortfall claim.” FTX.com is estimated to owe approximately $8.9 billion, while FTX.US owes around $166 million. This estimation represents a substantial stride towards addressing user concerns and compensating them for their losses.
The proposed plan suggests the division of assets into three distinct pools. These include assets specifically allocated for FTX.com customers, U.S. customers, and a general pool encompassing other assets. However, it’s important to note that the shortfall claim only applies to the first two groups, leaving the general pool unaffected.
John J. Ray III, the CEO and chief restructuring officer of FTX, expressed his satisfaction with the settlement terms. He emphasized its potential to expedite the return of funds to affected users. However, there is anticipation that customers may not receive full payment. Its customers might potentially face a higher percentage of losses compared to FTX.US customers.
FTX: Customer Withdrawals and Exclusions in Settlement Proposal
Interestingly, the proposed plan considers the circumstances surrounding customer withdrawals close to the bankruptcy announcement. In this case, customers who withdrew over $250,000 within nine days of the bankruptcy event may experience a 15% reduction in their claim amount. This reduction aims to ensure a fair and equitable distribution of available assets.
In a strategic move, the proposed settlement aims to exclude insiders, affiliates, and specific customers suspected of misusing or mixing customer deposits and corporate funds. This demonstrates a commitment to maintaining transparency and accountability during the distribution process.
As the FTX saga continues to unfold, Sam Bankman-Fried, the former CEO, finds himself entangled in a fraud trial. This development further highlights the intricate legal landscape surrounding FTX’s bankruptcy collapse in November of last year. The outcome of this trial bears significant implications for the ongoing bankruptcy proceedings and its future trajectory.
Related Reading | Bitcoin Regains Its Throne With Over 50% Dominance As Altcoins Falter
The author’s views are for reference only and shall not constitute investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing
Comments (No)