FTX Reorganization Plan Approved, Caroline Ellison’s Assets Seized: The Latest Update
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FTX Creditors Set for Historic Payout
A groundbreaking bankruptcy payout plan approved in October 2024 will see nearly 98% of FTX’s creditors receive an unprecedented 119% of their allowed claims. This comes as part of a massive $14 billion asset distribution, marking one of the largest payouts in bankruptcy history. FTX, once a giant in the cryptocurrency world, managed to amass between $14.7 billion and $16.5 billion in assets, far exceeding its estimated $11.2 billion in debts.
The recovery was largely driven by Bitcoin’s extraordinary 260% surge following FTX’s collapse, alongside strategic asset sales such as a $900 million stake in AI startup Anthropic. The plan also ensures that non-governmental creditors receive interest, setting a new benchmark for handling large-scale crypto bankruptcies.
While FTX’s creditors await their payments, which are set to be disbursed in over 200 jurisdictions, the actual payout date remains uncertain. Specialized agents are working closely with the FTX estate to secure a smooth and safe distribution of funds, which is expected to provide some relief to customers burned by the collapse. For smaller creditors, claims under $50,000 are slated for settlement within 60 days of the plan’s finalization, while larger claims may extend until mid-2025.
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Ripple Effects on Crypto Markets and FTT Token Decline
FTX’s native token, FTT, briefly surged 50% to $3.23 after the court’s approval of the payout plan, only to settle back at $2.72 and then plunge to $2.13 at the time of writing. Despite the brief uptick, the token’s value has been deemed effectively zero due to FTX’s financial restructuring, as per Judge John Dorsey. This highlights the ongoing volatility in the crypto space.
Meanwhile, analysts anticipate that around $2.4 billion from FTX repayments could gradually re-enter the crypto markets, potentially giving Bitcoin’s Q4 performance a modest boost. K33 analysts predict a slow trickle of funds through 2025, likely limiting any immediate impact. However, the 33% of claims owned by sanctioned or unverified entities could prevent a significant portion of these funds from being claimed.
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Further, the legal saga surrounding FTX continues, with FTX seeking court approval for settlement requiring ex-Alameda Research CEO, Caroline Ellison, to transfer assets to creditors. Though the value of her forfeited assets remains undisclosed, her cooperation with investigators has already resulted in a reduced two-year sentence, far lighter than the 25-year sentence handed to Sam Bankman-Fried. Her next hearing, set for November 20, 2024, will finalize the settlement.
Recently, FTX investors voluntarily dismissed their class-action lawsuit against Sullivan & Cromwell, a U.S. law firm, with no settlement. The suit alleged that Sullivan & Cromwell played a role in FTX's multibillion-dollar fraud. The lead plaintiffs' counsel stated that the dismissal resulted from insufficient evidence. With the dismissal, the focus will shift to obtaining compensation from other responsible parties, benefitting FTX creditors. The law firm clarified that there was no settlement associated with the dismissal.
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