FTX creditors will finally receive part of their assets. Amid this, FTT crypto has exploded in a huge FTX token surge – here’s why.
When FTX went under at the depth of the multi-month bear market in 2022, it was like crypto holders had been struck by a missile.
Bitcoin quickly sank, dropping below $20,000 and sinking to as low as $15,600.
The flash crash was even worse for Solana and its ecosystem tokens.
At the depth of the 2022 bear run, SOL had dropped to as low as $8, and the future was bleak.
The sentiment was so bad that a meme coin, Bonk, was distributed to SOL holders to ease their “pain.”
The Collapse Of FTX: The Start of the FTX Pay-Out Saga
However, what happened, in hindsight, was good for the industry.
After FTX’s unexpected collapse, governments, especially the United States and the SEC, cracked down on rogue crypto firms.
FTX went down, and holders lost nearly $12 billion, but Sam Bankman-Fried (SBF), Caroline Elisson, Binance, and Changpeng Zhao paid heavy fines.
SBF now serves 25 years in prison, while Binance had to pay over $4 billion in fines on top of management changes. Zhao paid $50 million in fines and served a 4-month prison sentence.
Nearly two years after this collapse, the FTX estate also made recoveries and will distribute $16 billion worth of assets to victims in the next few months.
FTX Creditors Demand Full Payment
Positive as this may be, and against expectations that creditors will be fully compensated, last-minute plan details discourage changes.
Well, Sunil Kavuli, an FTX creditor and activist, has revealed that FTX creditors will now receive between 10% and 25% of their crypto back.
Creditors will also receive funds depending on crypto prices when FTX declares bankruptcy.
FTX is transferring 18% of DOJ forfeiture funds up to $230m to FTX equity holders (Plan supplement)
FTX crypto holders are getting 10% to 25% of their crypto back pic.twitter.com/3f6BePpoNU
— Sunil (FTX Creditor Champion) (@sunil_trades) September 28, 2024
At that time, BTC was changing hands at nearly $16,000.
This means creditors will receive less than they lost, considering that SOL, Bitcoin, and crypto assets have rallied over the years.
Understandably, this is the source of outrage among FTX creditors. In their view, they should be compensated at current market prices.
They also want to be paid in crypto, not cash, even though FTX lawyers insist that reimbursements be made in cash to avoid clashes with bankruptcy laws.
The FTX trustee is also opposed to the reorganization plan. They argue that it grants too much legal protection to administrators, not victims.
FTT Crypto Price Spikes
Amid this, FTT crypto is surging.
FTT crypto, the FTX token, soared over 100% on September 29 before cooling off. While it is likely that the coin will continue printing higher highs, yesterday’s gains would likely be the biggest surge in the coming weeks.
Whether FTT crypto will also break $6 and begin reversing December 2022 losses remains to be seen; however, despite the high volatility showcased by Bollinger bands, and a magnificent jump above 20DMA support bodes well.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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