FTX Unveils Billions Repayment Plan to Compensate Creditors
FTX has announced a repayment plan to repay creditors and compensate for time value of investments, but valuation concerns remain over its effectiveness.
A repayment plan has been disclosed by FTX, the digital asset exchange that has gone bankrupt, in order to recompense its creditors for the damages they have sustained. Repaying all claims and providing extra compensation for the time value of investments are the goals of the plan, which is contingent upon the permission of the United States Bankruptcy Court for the District of Delaware to be implemented.
The Strategy for Repayment
The strategy that is being presented contains a recovery percentage of 118% for creditors whose claims are less than $50,000, which is equivalent to 98% of FTX's creditors regarding the number of claims.
In addition, creditors who have claims that are more than fifty thousand dollars will be given full payback as well as extra compensation for the time value of their investments.
According to the proposal, it is projected that the entire payout will be somewhere between $14.5 billion and $16.3 billion.
Following the adoption of the proposal, it is anticipated that payments would go into effect within sixty days.
Valuation is the Subject of Controversy
According to some who are opposed to the idea, the repayment of creditors based on the value of assets at the time of FTX's bankruptcy in November 2022 could not accurately represent the potential that their investments have at the present moment.
In the time after the crash, the cryptocurrency market has been subject to enormous volatility, with Bitcoin seeing a rise of roughly 280%.
Concerns have been raised by a number of creditors, including Mike Belshe, the Chief Executive Officer of BitGo, who believes that the repayment plan does not take into account the true worth of assets.
Efforts to Recover
Since the collapse of FTX in 2022, the company has been working through a difficult process of rehabilitation.
An $8 billion shortfall was identified by the exchange, which prompted a number of different financial manoeuvres to be taken in order to reduce losses.
The fact that FTX has declared that it will not be relaunching its cryptocurrency exchange activities is indicative of a strategic shift from the business model that it had previously used.
Mysterious Transfers
The two wallets that are connected to FTX and its sister company, Alameda Research, were responsible for initiating significant cryptocurrency transactions that totaled $8.3 million. This occurred just before a vital deadline.
In the cryptocurrency world, these transactions have caused suspicions to be raised since the purpose of these transfers has not been revealed.
The transactions took place one day before to the day when FTX debtors were supposed to submit an altered version of their "Plan and Disclosure Statement".
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