FTX, the failed cryptocurrency exchange, has announced plans to repay $16 billion to its customers and creditors. Repayments are scheduled to begin on January 3, 2025. This repayment plan, approved in October, aims to recoup 98% of beneficiary losses. It marks a significant step towards regaining confidence in the crypto industry.
With prominent partners such as BitGo and Kraken managing the distributions, the repayment process is expected to strengthen the credibility of the sector.
FTX news: Historical repayment plan in progress
FTX’s proposed Chapter 11 reorganization plan filed with the court contains a detailed plan for how it will pay off its debt. They will start with smaller requirements. Customers with claims less than $50,000 will be paid first. Larger claims will be processed later in 2025. Somewhat expected, some creditors will be able to get their funds back up to 119% of the account value.
FTX CEO John J. Ray III said he is optimistic about the repayment process because the company has worked for two years to recover billions of dollars. He said: “We are in a good position to start distributing refunds back to all customers and creditors.” The first repayment will be in the so-called favorable classes; further payment dates will be determined later.
To facilitate the distribution process, FTX has chosen partners in BitGo and Kraken. Regulated cryptocurrency trustee BitGo and global exchange Kraken will manage the allocation of funds among institutional and retail investors.
Market influence and opportunities
A huge payout can provide new capital in the cryptocurrency market. Most creditors are professional investors. They are likely to reinvest the capital gained back into major cryptocurrencies, such as Bitcoin and Ethereum.
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Greater liquidity can lead to increased buying interest. This can lead to an upswing in the market as after periods of consolidation the crypto market has often shown strong gains.
However, repayments will be made at November 2022 Bitcoin prices of $17,000.
FTT Token Analysis
Currently, FTX’s parent token, the FTT token, is showing slight positive strength ahead of the start of the repayment plan. As of now, the FTT exchange token is trading at $3.57. It has risen by 3.96% in the last 1 day with a daily trading volume exceeding $96.98 million.
The price of the token fluctuated between $3.42 and $3.82, which is relatively low volatility during the day.
However, the price is volatile and subject to change as FTT is still tied up with FTX and its bankruptcy case. Liquidation risk remains high as the token could be used to pay remaining liabilities during repayment.
The token’s recent activity shows how assets associated with bankrupt crypto companies can be quite volatile. Although the announcement of the repayment brought hope to the market, the utilization and liquidity of FTT are still a concern for market players.
The road to recovery
That’s because FTX filed for Chapter 11 reorganization in its efforts to get back on its feet. January 3, 2025 was set as the effective date of the plan, and January 3, 2025 was approved as the initial distribution record date for eligible claims. Customers are encouraged to go through the proper channels to ensure they receive their distribution on time.
John J. Ray III noted the positive development of FTX’s recovery team and said, “The January 2025 effective plan and commencement of distributions reflect the remarkable success of the recovery effort.”
