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.
These refunds might include the amounts of the bankruptcy claims and interest to the non-governmental creditors. The total property value collected and distributed to creditors is between $14.5 billion and $16.3 billion.
This includes assets owned by the FTX’s Chapter 11 debtors and those administered by various entities. The Joint Official Liquidators of FTX Digital Markets Ltd (Bahamas) and the Securities Commission of The Bahamas.
Mt.Gox Bitcoin Dump Impacts Crypto Market
Markedly, the confirmation hearing for the reorganization plan is scheduled to commence on October 7, 2024, when the final vote counts will be announced.
As the date draws closer, investors are beginning to wonder if this will be another Mt.Gox asset dump. The move is bound to inject liquidity into the crypto market, which could impact digital asset prices.
Mt.Gox crashed ten years ago and chose to repay the creditors impacted by its 2014 crash. In May, the defunct Bitcoin exchange transferred over 140,000 bitcoins worth 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 plunged slightly, and so did the market value of other digital assets like Bitcoin Cash (BCH)
German Government Empties Bitcoin Holdings
Around the same time, the German government transferred Bitcoin to exchanges like Coinbase and Kraken. The move ignited concerns among investors and traders about a potential selloff.
At some point, there was a transfer of $350 million worth of the flagship cryptocurrency. This also followed another offload of $615 million worth of BTC, a series of flows that triggered market instability.
These German Bitcoin holdings came from several seizures. The crypto market also felt the effect of these series of crypto dumps as Bitcoin struggled to maintain a positive price surge at the time. Investors are getting jittery, considering how the two events turned out for the industry.
US Authorities Challenges FTX Restructuring Plan
Meanwhile, the FTX restructuring plan is yet to resonate with the US Securities and Exchange Commission (SEC). The regulator raised concerns about FTX’s proposed plan to use stablecoins to pay creditors. The Commission made it clear that it has chosen not to opine on the legalities of the transactions under the federal securities laws.
Similarly, the US Trustee has also opposed some aspects of the bankruptcy plan. This includes the discharge clause that would release FTX debtors from future legal actions by creditors.
Generally, these entities are questioning the appropriateness and efficacy of the FTX proposed repayment plan. It is uncertain how reluctance from both entities will impact the FTX repayment plan.
On one hand, FTX and Alameda Research have settled with the United States Commodity Futures Trading Commission (CFTC). The sister firms have agreed to pay $12.7 billion to creditors.
