FTX’s Bold Move: 98% of Creditors to Get 118% of Claims in Cash

• FTX’s restructuring plan promises 98% of creditors will receive 118% of their claims in cash, post-court approval.
• The plan includes additional payments with up to 9% interest for certain creditors, backed by $14.5 to $16.3 billion in liquid assets.

FTX.com reported a substantial deficit at its Chapter 11 bankruptcy filing in November 2022, holding far less Bitcoin and Ethereum than customers had expected. Despite these obstacles, the company has not gained from any increase in value of these absent cryptocurrencies throughout the bankruptcy process.

FTX, now under new management, has unveiled an optimistic reorganization plan following its bankruptcy. The plan outlines a remarkable turnaround, promising 98% of creditors will receive 118% of their original claims in cash within 60 days of court approval. Additionally, certain creditors are slated to receive full repayment plus up to 9% interest. This approach marks a significant improvement from earlier projections, which estimated only a 90% repayment rate.

Asset Liquidation and Market Impact

As highlighted in today’s CNF YouTube video, the revival of FTX’s finances is attributed to meticulous global asset recovery and liquidation efforts, not the recent upticks in the cryptocurrency market. Noteworthy moves include selling stakes in AI startup Anthropic. These strategic decisions have enabled FTX to amass funds ranging between $14.5 billion and $16.3 billion.

The plan, pending approval from a Delaware bankruptcy court, also proposes settlements for claims by major regulators like the IRS and CFTC, prioritizing repayments to users and investors. This strategy has been leveraged by former CEO Sam Bankman-Fried’s legal team to argue for a reduced sentence, despite his ongoing appeal against a 25-year fraud sentence.

Market Reactions to FTX’s Auctions

The cryptocurrency market has experienced notable fluctuations, highlighted by a 21% drop in Solana’s price after FTX announced the third tranche of its auction for locked Solana coins. This event was widely covered, with CNF reporting on the ‘FTX Estate Sale Fallout: Solana Sees 21% Price Dip – Investors Evaluate Dumping Tokens,’ which reflected investors’ reconsideration of their holdings amid the sell-off.

Despite this downturn, technical indicators like the Relative Strength Index (RSI) and Awesome Oscillator (AO) point to a potentially bullish future for Solana. Following these developments, Solana’s value has surged by 21.30% over the past week, with the latest price recorded at $145.80, according to Coin Market Cap.