The recent changes in FTX's repayment plan will leave crypto holders with a recovery of only 10-25% of lost assets, while preferred shareholders benefit from a $230 million fund.
Crypto Holders' Asset Situation
FTX's repayment plan stipulates that crypto holders can only expect to recover 10-25% of lost assets. Much of the forfeited funds will go to preferred shareholders, aggravating creditors. Asset prices will be calculated from the date of bankruptcy filing, which disappoints many investors as current crypto prices have surged.
Preferred Shareholders' Gain
FTX will pay 18% of surrendered money into a $230 million Preferred Shareholder Remission Fund. This means equity investors benefit, while crypto holders have a considerably lower recovery rate.
Overall Outcomes of FTX’s Repayment Plan
The fall of FTX resulted in $12.7 billion of repayments owed. Because repayments are pegged to the lower asset prices during bankruptcy, many crypto holders are questioning the fairness of the plan.
FTX's repayment plan causes disappointment among crypto holders and raises questions about the fairness of fund distribution. Preferred shareholders stand to gain significantly from the remission fund.
