LONDON (IT BOLTWISE) – Creditors of the insolvent crypto exchange FTX could expect significantly lower repayments than originally assumed. Despite planned repayments in fiat currency that are expected to cover 143% of the original claims, real returns in cryptocurrencies such as Bitcoin and Ether could be significantly lower. This is due to the sharp rise in crypto prices since the exchange collapsed in 2022.
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Creditors of insolvent crypto exchange FTX face the sobering prospect that their repayments could be far below expectations. Despite the planned repayments in fiat currency, which are expected to cover 143% of the original claims, the real returns in cryptocurrencies such as Bitcoin and Ether could be significantly lower. This is due to the sharp rise in crypto prices since the exchange collapsed in 2022.
Sunil, a prominent representative of FTX creditors, estimates that the real recovery rate for FTX creditors is between 9% and 46%. He points out that the actual value could be even lower as the prices of Bitcoin, Ether and Solana have risen sharply since the exchange collapsed. For example, at the time of the petition, Bitcoin price was $16,871, while now it is over $110,000. A 143% repayment in fiat therefore only corresponds to around 22% of the real Bitcoin value.
However, in addition to the planned repayments, there is also the possibility of “additional recovery” through airdrops from external projects targeting FTX creditors. Sunil cites Paradex as one such initiative and emphasizes that FTX creditors are viewed as valuable assets for projects. The first round of FTX creditor payments for recipients with claims under $50,000 was distributed back in February 2023, totaling $1.2 billion.
In May, the FTX Recovery Trust launched its second payout of $5 billion to eligible creditors. This payment covered multiple claim categories, including Dotcom customer claims (72%), US customer claims (54%) and convenience claims (120%). Former FTX CEO Sam Bankman-Fried, who is currently serving a 25-year prison sentence for fraud and conspiracy, will appear before the US Court of Appeals for the Second Circuit on November 4 to challenge his conviction.
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