FTX plans to dispense over $1.2 billion as refunds to the users of the defunct cryptocurrency exchange, which went bankrupt.
Previously recognized as the globe’s second-largest centralized cryptocurrency platform (Crypto Exchange), FTX, is now preparing to refund users whose accounts have remained inactive and locked for more than two years.
Individuals using the platform with a digital asset debt of up to $50,000 must complete their repayment obligations by January 20th.
As a researcher reporting on this topic, I can share that, based on information from Sunil, a significant FTX creditor and member of the FTX Customer Ad-Hoc Committee (a group of over 1,500 creditors), it is expected that FTX will initiate repayment of claims up to $50,000 starting from January 20.
According to Sunil’s post on January 11, FTX requires all necessary preparations for the initial distribution to be completed by January 20th. It is unlikely that repayments will begin before this date.
The January 20th deadline aligns with U.S. President-elect Donald Trump’s inauguration, fueling anticipation for greater clarity on cryptocurrency regulations and potential approval of the Bitcoin Act. This legislation aims to establish a Bitcoin (BTC) reserve within the United States, the world’s leading economy.
With funds from the imminent FTX repayments added, January 20th might trigger the next phase of growth in the 2025 cryptocurrency market trend, potentially causing Bitcoin’s value to exceed $200,000, as predicted by some experts in the field.
Will FTX repayments lead to crypto market volatility?
As an analyst, I’m sharing some insights about FTX’s restructuring plan, which was given the green light in October 2024. This plan indicates that those users who claimed up to $50,000 will be the initial group to receive repayments. Furthermore, the plan suggests that approximately 98% of FTX users could potentially receive a return of 119% on their declared account value.
In a different phrasing: Some lenders have voiced concerns about the repayment system that pays out claimants according to the value of cryptocurrencies at the time of bankruptcy. For instance, Bitcoin’s price has surged over 370% since November 2022.
Some crypto investors anticipate increased market turbulence, but the FTX repayments serve as a vital action towards making amends for previous issues and restoring trust within the cryptocurrency industry.
Based on Anndy Lian’s perspective as an author and intergovernmental blockchain expert, the repayments could prompt a variety of responses from investors, contingent upon each investor’s personal risk tolerance level.
Lian told CryptoMoon that some of the repayments may flow back into other cryptocurrencies:
“Smaller investors, who’ve been hit hard by FTX’s collapse, might be more inclined to sell for financial security. Those with a bit more faith in the long-term prospects of crypto might stick it out, betting on future growth. It’s all about individual circumstances and risk appetite.”
As a crypto investor, I can’t help but reflect on the MT. Gox incident, which serves as a reminder that many investors opted to keep their digital assets, holding out hope for brighter times ahead.
The majority of Mt. Gox creditors have generally chosen to keep their Bitcoin, even as its value soared more than 8,500% in the decade following the collapse of the Japanese exchange.
41.5% of the Bitcoin distribution by Mt. Gox was finalized on July 30, with creditors receiving a total of 59,000 Bitcoins as part of this process.
Contrary to holding over $4 billion in Bitcoin, the Mt. Gox creditors appeared unwilling to sell their holdings, as per a Glassnode report published on July 29.
“Creditors opted to receive BTC, rather than fiat, which was new in Japanese bankruptcy law […] As such, it is relatively likely that only a subset of these distributed coins will be truly sold onto the market.”
In December, crypto companies BitGo and Kraken declared their intention to aid FTX in dispersing compensation to its users. If every user submits a complete claim, it’s projected that the platform might disburse around $16 billion.
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2025-01-13 12:40