The cryptocurrency market’s biggest scandal is close to coming to an end. FTX has rolled out its latest performance update in the bankruptcy saga with a consensus-based Plan of Reorganization. According to the plan, FTX is paying 98% of FTX creditors and customers as promised, at least, a generous 118% of their allowed claims in cash. This payment is set to happen within just 60 days of the plan’s effectiveness.
Meanwhile, other creditors are poised to receive 100% of their claims plus a bonus for their patience. It sounds almost too good to be true, and as history teaches us, it probably is. This announcement comes 17 months after their infamous Chapter 11 filing. In total, FTX is pledging a whopping recovery of between $14.5 and $16.3 billion from what they describe as a diverse collection of assets.
The Reality Behind the Curtain
Diving deeper into the details, it’s clear that while the big players align their pockets, the smaller creditors get strung along with promises. The “diverse collection of assets” includes everything from proprietary investments to litigation claims — essentially, FTX is scraping every last barrel for assets. This approach seems more like a desperate scramble than a structured financial strategy.
For those not holding million-dollar claims, welcome to the “convenience class” a group created under the plan to expedite smaller claims, which sounds considerate but translates to “let’s clear the small debts first so we can focus on the big fish.” This handling shows the skewed priorities of the reorganization — protecting the interests of the wealthy and leaving crumbs for the small investor.
John J. Ray III, the CEO at the helm through this restructuring, has repeatedly patted his back and that of his team for their supposed diligence and hard work. While they thank government agencies and big stakeholders, the small creditors are left parsing through complex legal jargon and grand promises, hoping they don’t end up on the losing end once again.
Don’t let crypto give you a run for your money. Track coin prices here.
