Court approves FTX bankruptcy plan

A Delaware court has approved FTX’s bankruptcy compensation plan, which will refund users 119% of their original deposits in fiat currency.

On October 7, a bankruptcy court in Delaware approved the compensation plan for creditors of FTX, which collapsed in November 2022. This plan, initially presented in September, has gained the backing of 94% of creditors and promises refunds averaging 119% of the value of their assets at the time of the exchange's bankruptcy.

Read more: Good News for FTX as US Judge Green Lights its $16.5 Billion Bankruptcy Plan But Customers’ Response Lukewarm

Judge Dismisses Objections Over FTX Refund Method and FTT Token Valuation

Judge John T. Dorsey, who oversaw a nearly six-hour hearing, dismissed objections raised by companies like Celsius and Layer Zero, along with individual creditors. The primary objections centred around the refund method being in fiat currency instead of cryptocurrency and the zero valuation of FTT tokens.

Brian Glueckstein, representing FTX’s bankruptcy team, justified the zero valuation of FTT tokens, citing their lack of intrinsic value without an operational FTX platform. Strangely, despite this ruling, FTT’s market value rose by 20% before declining again.

FTX CEO Praises Team for Asset Recovery and Financial Rebuilding

John Ray, FTX’s current CEO, commended the professionals involved for their role in recovering billions of dollars. He attributed the progress to their efforts in reconstructing FTX’s financial records and securing assets worldwide.

Read more: FTX Creditors Greenlight $6 Billion Bankruptcy Payout to Affected Users: Will It Boost Crypto Market Liquidity?

Further considerations

Although refunds in cryptocurrency have been ruled out, there remains a possibility that some distributions could occur in stablecoins, despite opposition from the SEC. Discussions with four companies to manage these payments are ongoing.

While the approval of FTX’s compensation plan marks significant progress, the exclusion of cryptocurrency refunds and the controversy surrounding FTT token valuations could lead to dissatisfaction among creditors.