- FTX Bankruptcy Plan Approved on $16.5B
- It assumes a higher-than-expected covering of 119%
- It also gives priority to investors with account balances of $50K and less
Long-awaited, and good news for those affected by the collapse of FTX, as The U.S. Bankruptcy Judge John Dorsey approved the FTX bankruptcy plan, which assumes compensation of $16.5 billion, and on favorable terms for small investors.
Of course not everything is perfect, 98% of clients are expected to see compensation and many investors are still losing money without being able to invest their money in the market.
FTX Bankruptcy Plan Details
So, this plan has been a long time in the making and has been discussed with many parties like FTX itself, creditors, customers, and regulators.
Since this process has been dragging on for a very long time and a huge number of investors around the world simply could not invest in the market and suffered losses, there are still a lot of justly disappointed with the overall situation.
However, FTX’s new CEO, John Ray, highlighted the progress they’ve made, recovering between $14.7 billion and $16.5 billion in property that’s ready to be distributed.
And now, the recovery plan has been approved, and to some extent it is intended to offset this aspect as well, offering non-government creditors up to 119% of their claims.
That said, thanks largely to Judge John Dorsey, priority for repayment is given to small investors with account sizes up to $50,000, while FTX shareholders are last in line for recovery.
However, their compensation may be helped by the $1 billion that was seized during Bankman-Fried’s trial, so the company is negotiating with the U.S. Department of Justice about it.
Payouts will begin to arrive within 60 days of the plan’s official launch date, but it has yet to be announced for sure.
Conclusions
This is a very painful lesson for the entire crypto community and many crypto investors, which tells us that even great technology can take on different meanings in different hands.
We need to be very careful even in the crypto space, where security is embedded in the very foundation of the technology, and diversify risks by critically evaluating all aspects of the situation or the platform participants.
However, it is good that somehow the case has developed and to some extent, the losses will be compensated. Stay aware and careful.
