born2invest.com
Just over a year ago, the US crypto exchange FTX had to declare bankruptcy. More than a million ex-customers are waiting for compensation. The insolvency administrator now wants to settle in cash at the current market value, which is met with resistance. The problem: The million or more damaged ex-customers of FTX had often invested Bitcoin and Co. with FTX.
November 11th, 2022 went down in crypto history as the day the crypto exchange FTX and its affiliated companies filed for bankruptcy. A good year later, the FTX insolvency proceedings are slowly coming to an end and the situation is complicated.
The bone of contention is the insolvency administrator’s plan, which was sent to the responsible court , not to compensate the former FTX customers in crypto, but to pay out US dollars at the value of the cryptocurrencies at the time.
Read more about FTX bankruptcy and find other important business news from around the world with our companion app Born2Invest.
The problem: The million or more damaged ex-customers of FTX had often invested Bitcoin and Co. with FTX.
In total, the equivalent of more than $8 billion in customer money is said to be affected by the FTX bankruptcy. But as of November 11, 2022, the crypto markets were in a deep trough, Bitcoin (BTC) as the reserve currency was trading at around $17,000 and has since recovered to currently over $40,000.
The market capitalization of Bitcoin and thousands of altcoins combined was only around $0.85 trillion in November 2022 and is now more than $1.6 trillion again. If compensation was paid in cash, the FTX victims would miss out on the profits that the price curves of many cryptocurrencies have shown over the last 13 months.
Resistance to the FTX insolvency administrator’s proposed approach is also gathering on X (formerly Twitter). User Sunil, for example , writes that FTX customers owned crypto assets according to the terms and conditions.
Others agree with him and make it clear: We want our assets back in crypto and not to be fobbed off with US dollars at the value at the time. Whether this demand is still realistic seems questionable. As far as is known, the FTX insolvency administrator began selling billions worth of crypto from the insolvency estate in September.
Conclusion: FTX bankruptcy proceedings lead to trouble
Apparently FTX victims should still be given the opportunity to agree to or reject the plan to resolve the bankruptcy. But there will probably be no individual solutions; the principle known in US law as “ cram-down ” should apply, which enforces a unanimous settlement of claims for all FTX creditors.
Incidentally, on secondary markets such as the “ Claims Market ”, the claims on FTX are now traded for well over 60 percent of the nominal value. Other news reports have also recently shown that 100% compensation no longer seems impossible when calculated in US dollars. Whether this is enough for the victims of FTX is also a theoretical question – because otherwise the crypto markets could have continued to develop downwards since November 2022.
__
(Featured image by Mariia Shalabaieva via Unsplash)
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the articles from the originals. In case of discrepancy, the originals will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us