Despite social media rumors suggesting an FTX reimbursement by September 30, customers will have to wait an additional week for updates on repayments.
FTX Awaits Court Approval for Reorganization Plan
When FTX filed for bankruptcy protection in November 2022, and CEO Sam Bankman Fried resigned, John Ray III, a long-time bankruptcy litigator, took over the reins to try and fix the mess. On May 7, 2024, the exchange filed its Chapter 11 Plan of Reorganization and a disclosure statement, revealing that it owed about $11.2 billion to its customers. The company estimated it could distribute between $14.5 billion and $16.3 billion to pay its creditors and customers. The plan also included details on supplementary interest payments that could be made once all claims are paid in full.
Analysts Predict Bullish Market Outlook on FTX Repayments
Crypto analyst Miles Deutscher believes that with FTX paying over $16 billion to its creditors, recipients could re-enter the market, making new bids and thus infuse the money back into the crypto market, fueling crypto market activity. Marty Party, a crypto researcher and analyst, also thinks that the $16 billion payout could end up back into the crypto market as reinvestments, providing more liquidity for crypto’s ecosystem. Markus Thielen, founder of 10x research, maintains that FTX disbursements could contribute to a positive crypto market outlook. He remarked that there could be a melt-up in risk assets since the Federal Reserve seemed to have raised the S&P 500 level at which they would step in to protect investors. This, he explained, suggested potential for additional rate cuts, commonly known as the “Fed put.” Consequently, he believed many investors would likely adjust their portfolios in preparation for 2025.
The next court hearing is set for October 7, and Judge John T. Dorsey will preside. Creditors will have to wait till then to get some clarity on their repayments. If the court approves the plan, creditors with smaller claims under $50,000 may receive their paybacks before the year’s end.
