A five-hour trial resulted in FTX bankruptcy. Creditors will recover up to $16.5 billion. However, some are not happy about it.
This is obviously useless.
And yet the FTT token was once boosted by failed crypto exchange FTX on Monday, after a US bankruptcy judge declared the token worthless.
“I have no evidence that the value of the FTT tokens is anything other than zero,” US Bankruptcy Court Judge John Dorsey for the District of Delaware said during a Monday hearing to dismiss the request by creditors holding the token. in their FTX accounts when the exchange crashed.
That hearing, which lasted more than five hours, ended FTX's two-year bankruptcy.
Judge Dorsey approved the repayment plan for FTX's creditors, 98% of whom will receive all the money they lost, and then some. But, arguably, not all they lost was crypto.
That has angered some investors because those assets have risen in value since the exchange's collapse. Instead they recover the monetary value of those assets during the downturn.
to $16.5 billion
FTX expects to distribute between $14.7 billion and $16.5 billion, making it “the largest and most complex bankruptcy estate asset distribution in history.” According to John Ray, an executive appointed to steer the company through the bankruptcy process.
But crypto markets are muted. As of Tuesday morning London time, bitcoin had fallen 1.7% to around $62,400 since before Judge Dorsey approved the repayment plan. It has recovered a bit since then.
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Ethereum fell 1.3% to $2,430 and Solana – the cryptocurrency most closely associated with FTX – fell 2.1% to $145.
FTT jumps
Meanwhile, FTT rose 20.1% to $4.60.
Like other tokens issued by centralized exchanges, FTT grants holders certain privileges such as lower trading fees on FTX.
The token was worth about $25 before the exchange's collapse, hovering around $1 a year after FTX filed for bankruptcy, occasionally spiking along with it. Reports Ray is considering rebooting FTX.
Those plans have been dead for months, but FTT Value refused to go through with it.
Lawyers for the bankrupt exchange reiterated Monday that they have no plans to launch a new FTX under it or any other.
“FTT has no fundamental value because it has no purpose outside of running the ftx.com exchange,” said Brian Gluckstein of Sullivan and Cromwell. “None and there will be no restarted ftx.com exchange.”
During the bankruptcy process, some victims objected to the decision to repay creditors exclusively in cash, rather than the assets they held at the time of FTX's collapse.
According to FTX, 98% of creditors get 119% of the value of their claims. Those claims are based on the crypto's value in November 2022, when the company filed for bankruptcy and bitcoin was trading below $20,000. This means lenders will miss out on the crypto rally they have been enjoying ever since.
But FTX couldn't pay customers in crypto because it never owned that crypto, according to Steven Coverrick of Alvarez & Marsal.
Disbursing the repayments in kind “would mean borrowers would have to buy that cryptocurrency on the open market to make the disbursements,” he said.
FTX “would then have to buy billions of dollars of cryptocurrencies at that volume … resulting in a run up in the market.”
Despite the controversy surrounding in-tier payments, a majority of creditors backed the restructuring in a vote earlier this year. Court documents.
“I want to say congratulations,” said Judge Dorsey. “This is a model case of how to deal with a very complex Chapter 11 bankruptcy.”
Crypto market movers
Bitcoin is down over 2% in the last 24 hours to trade at $63,230. Ethereum is down just under 3% to trade at around $2,420.
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Alex Gilbert is a Defy correspondent at News. Got a tip? Email at [email protected].
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