FTX Derivatives Exchange Is Reportedly on Track to Distribute $16 Billion in Assets to Its Affected Creditors

The bankrupt firm recently amended its reorganization plan, offering the possibility of total repayment.

Bankrupt crypto exchange FTX is reportedly set to distribute a massive sum of assets, ranging from $14.5 billion to $16.3 billion, to its affected creditors through its Chapter 11 bankruptcy proceedings.

This includes funds from FTX’s Chapter 11 debtors, as well as assets administered by entities such as the Joint Official Liquidators of FTX Digital Markets Ltd (Bahamas) and the Securities Commission of The Bahamas.

The total property value will be distributed to non-governmental creditors, with the specific amounts covering their bankruptcy claims and interest.

The confirmation hearing for the reorganization plan is scheduled for October 7, 2024, where the final vote counts will be revealed.

As the date approaches, concerns arise among investors regarding the potential impact of these asset dumps on the crypto market.

The move is bound to inject liquidity into the market, which could influence the prices of digital assets.

Recalling a similar event, Mt.Gox, which crashed a decade ago, recently opted to repay its creditors impacted by its 2014 crash.

In May, the defunct Bitcoin exchange carried out a massive on-chain transfer of over 140,000 bitcoins, valued at around $9 billion, to designated addresses in preparation for the repayment process.

Even CryptoQuant’s Head of Research, Julio Moreno, confirmed the outflows from Mt.Gox addresses to exchanges. Following the massive transfer, the crypto market took a bearish turn.

Bitcoin’s (BTC) price slightly decreased, impacting the market value of other digital assets like Bitcoin Cash (BCH).

Around the same time, the German government also transferred Bitcoin to exchanges like Coinbase and Kraken, sparking concerns among investors and traders about a potential selloff.

At one point, there was a transfer of $350 million worth of the flagship cryptocurrency, following another offload of $615 million in BTC—a series of flows that triggered market instability.

These German Bitcoin holdings stemmed from several seizures, and the crypto market felt the brunt of these two asset dumps, with Bitcoin struggling to maintain a positive price surge at the time.

Now, investors are left wondering how this will play out considering the previous two events in the industry.

In another development, the FTX restructuring plan has faced challenges from US authorities. The Securities and Exchange Commission (SEC) raised concerns about FTX’s proposed use of stablecoins to pay creditors, stating that the regulator has chosen not to opine on the legalities of the transactions under federal securities laws.

The U.S. Trustee has also objected to certain aspects of the bankruptcy plan, including a discharge clause that would shield FTX debtors from future legal actions by creditors. Both entities continue to express reservations about the adequacy of FTX's proposed repayment plan.

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