s the restructuring of FTX goes on, creditors may be forced to wait much longer than they had initially predicted to have their lost funds repaid. A court hearing scheduled to happen on October 7, 2024, is set to shed light on the fate of the creditors which has remained quite unsure for now. While fresh reports say it could take up to one year for creditors to start receiving their repayments, some estimates stretch into 2025.
Creditors May Wait Until 2025 for Payouts
Despite the rumours that a $16 billion payout could happen this week, many social media influencers may be misleading others. As it happens, FTX's reorganization plan has not been approved; as reimbursements may take several years.
In its newest filings, FTX has reserved $230 million exclusively for shareholders, an amount many worry shows priority over creditor reimbursements.
Sunil Kavuri, an activist on behalf of creditors, has publicly disputed online predictions. He noted that many creditors would not receive meaningful distributions until the second quarter of 2025. The plan proposes settling all claims of less than $50,000 first; this could be completed by the end of 2024. Those with claims over $50,000 will not see the beginning of reimbursements until 2025.
Market Reaction to the Announcement
After the news about the repayment plan, FTT surprisingly went up in price. It rose as high as $2.94, well over a psychological barrier above the $2 level. This is a case when the general cryptocurrency market has started showing signs of stagnation, which underlines the strong resilience of FTT and the immediate investor interest in the token.
Meanwhile, technical indicators are also showing promising signals for FTT. The token's price has broken above significant resistance zones such as the 200-day EMA and has even flashed a golden crossover against the 50-day EMA. According to analysts, this could propel the FTT further up to higher price levels, even up to $3.50, provided that this trend sustains.
Limited Recovery for Creditors
The bankruptcy filing points to the fact that creditors will get only a portion of the assets they lost. Instead of paying the value of their lost cryptocurrencies at their present value, they will be reimbursed based on the USD value at the time the exchange went down in November 2022. For example, if one creditor lost one Bitcoin, he will only be compensated at its November 2022 value of about $16,000, instead of more than $65,000, which is the current market price.
The initial optimism, driven by rising cryptocurrency prices regarding the recovery of funds, has now been put in check with the recent developments. The court-appointed CEO of FTX, John J. Ray III, had once said that the recovery of assets might allow for a better repayment scheme. But the bottom line is that creditors are now staring at payouts likely between 10 and 25% of their original losses.
The October 7 in-court hearing will ultimately seal the fate of FTX's repayment plan and how much longer it could take for creditors to recover. Until that date, it remains uncertain where the financial futures of those affected by the downfall of the exchange now rest.
