FTX, the collapsed cryptocurrency exchange, has announced plans to repay $16 billion to its customers and creditors. Repayments are to start on January 3, 2025. This repayment plan, approved in October, aims to restore 98% of customer losses. It marks a significant step toward regaining trust in the crypto industry.
With prominent partners like BitGo and Kraken handling distributions, the repayment process is expected to strengthen the sector’s credibility.
FTX News: A Historic Repayment Plan In Progress
The proposed Chapter 11 reorganization plan of FTX submitted to the court has a detailed plan on how it will repay the debt. It’s going to start with the smaller claims. Customers with claims under $50,000 will be paid first. The larger claims would be processed later in the year 2025. Somewhat expectedly, some creditors will be able to get their funds back for up to 119% of the account value.
FTX CEO John J. Ray III said that he is optimistic about the repayment process, as the company has worked for two years to recover billions of dollars. He said, “We are well positioned to begin executing the distribution of recoveries back to all customers and creditors.” The first repayment will be on the so-called Convenience Classes; further payment dates shall be established later on.
To facilitate the distribution process, FTX has chosen partners in BitGo and Kraken. The regulated cryptocurrency trustee BitGo and the global exchange Kraken will manage the distribution of funds among institutional and retail investors.
Market Impact and Opportunities
The huge repayment is capable of providing new capital into the cryptocurrency market. Most of the creditors are professional investors. They’re likely to reinvest the gained capital back to the largest cryptocurrencies, such as Bitcoin and Ethereum.
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Higher liquidity may lead to increased buying interest. It can lead to a market upswing because after periods of consolidation, the crypto market has often shown strong gains.
Still, the repayments will be made with November 2022 prices with Bitcoin standing at $17,000.
FTT Token Analysis
Currently, FTX’s native token, FTT token, is showing slight positive traction before the commencement of the repayment plan. As of now, FTT exchange token is trading at $3.57. It has risen by 3.96% in the last 1 day with daily trading volume crossing $96.98 million.
The token’s price has oscillated between $3.42 and $3.82, which is relatively low volatility within the day.
Still, price is volatile and may reverse as FTT is still linked with FTX and its bankruptcy case. Liquidation risk remains high as the token might be utilized to pay off the remaining dues in the course of the repayment.
Recent activity of the token shows how the assets related to the bankrupt crypto companies can be quite volatile. Although the repayment announcement has brought hope in the market, the use and liquidity of FTT are still a concern to the market players.
Road to Recovery
This is because FTX has filed for Chapter 11 reorganization in its efforts to get back on its feet. Jan 3, 2025 has been set as the effective date for the plan and Jan 3, 2025 has been approved as the initial distribution record date for eligible claims. The customers are urged to go through the right channel to ensure they receive their distributions in good time.
John J. Ray III noted the positive development of FTX’s recovery team and said, “The plan becoming effective in January 2025 and the start of distributions are reflections of the outstanding success of the recovery efforts.”
Source: https://www.thecoinrepublic.com/2024/12/30/ftx-news-16-billion-worth-of-repayments-set-for-2025/
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