Bitrabo Editorial
Recently, FTX, a bankrupt cryptocurrency exchange, revealed a comprehensive reimbursement plan to fully repay creditors and customers, offering substantial compensation to account for their investments.
While customers were expected to gain the most, the primary beneficiaries turned out to be bankruptcy traders, seizing opportunities to purchase claims at discounted rates before FTX declared bankruptcy.
FTX’s Generous Refund Policy
Reported by Bitrabo, FTX’s reorganization plan submitted to the United States Bankruptcy Court of Delaware details the allocation of assets to those affected by the exchange’s fraudulent activities.
The plan involves distributing all assets from FTX’s collapse in November 2022 to creditors and customers in a centralized manner, with settlements in progress with key stakeholders, including a resolution to the $24 billion claim by the IRS.
Bankruptcy Traders as the Real Winners
Contrary to expectations, bankruptcy traders emerged as the real winners of FTX’s repayment plan, as they purchased claims at a fraction of their value before the bankruptcy filing, seeing bid prices of claims rise significantly.
Hedge funds like Attestor, Baupost, and Farallon, experienced substantial returns, with claims buying platform FTX Creditor’s founder, Louis d’Origny, set to profit over $25 million from personal investments.
While some claimants have benefited greatly, others are dissatisfied, arguing that the current value of their crypto tokens should be honored, expressing concerns over asset sales practices by the estate administrator.
Arush Sehgal, an investor and former member of FTX’s unsecured creditors’ committee, criticizes the estate’s selling practices, highlighting the damage done by the administrator exceeding the original crime committed by former CEO Sam Bankman-Fried, who is serving a 25-year sentence for defrauding customers.
The repayment announcement has fueled FTT trading at $2.015, up over 25% in the last 24 hours, indicating positive market response to the news.
Image source: Shutterstock, chart from TradingView.com