FTX, the cryptocurrency exchange facing a major collapse in 2022, has unveiled a new proposal to compensate victims of its fall. The latest plan promises substantial reimbursements, but opinions vary about its adequacy and fairness.
Proposal details: compensation and eligibility criteria
In its recent statement, FTX outlined a plan to provide “billions in compensation for the time value of their investments” to creditors affected by its collapse. However, only creditors with claims below $50,000 will be eligible for a 118% recovery, which is approximately 98% of FTX creditors.
Despite the promise of significant compensation, the proposal has drawn criticism because it repays creditors based on the value of assets at the time of the stock exchange's failure, rather than current market prices.
Evaluation of the FTX plan: adequacy and reception
While FTX CEO John J. Ray III expressed satisfaction with the proposed plan, saying it guaranteed repayment of 100% of bankruptcy claim amounts plus interest, some industry observers remain skeptical . The total estimated distribution to creditors is between $14.5 billion and $16.3 billion, with repayments expected to occur within 60 days of approval.
Critics say the plan fails to fully compensate victims, especially since the cryptocurrency market has seen significant growth since FTX's collapse. Mike Belshe, CEO of BitGo, expressed concerns about the disparity between the proposed refunds and current market values, highlighting the continued discontent within the affected community.
Read also: FTX Bankruptcy: Promises 100% Reimbursement to Customers in Remarkable Turnaround
FTX Recovery Efforts and Future Outlook
In the aftermath of its collapse, FTX implemented various strategies to recover from the financial debacle. The stock market notably orchestrated an $884 million stock sale in Anthropic, an artificial intelligence company, as part of its restructuring efforts.
Despite these efforts, FTX clarified earlier this year that its restructuring plans would not include a relaunch of the cryptocurrency exchange itself. The move marks a significant shift from its previous status as one of the largest platforms in terms of trading volume.
As stakeholders await further developments in FTX's compensation proposal and restructuring initiatives, the fallout from the 2022 collapse continues to reverberate throughout the cryptocurrency community.