A US judge just approved FTX’s bankruptcy plan, clearing the way for over $16 billion in repayments to creditors. Some think this could be a major boon for the crypto market.
During a Monday hearing, Judge John Dorsey of the US Bankruptcy Court for the District of Delaware approved the plan.
That plan will see 98% of FTX creditors receive at least 118% of the value of their claim in cash.
Some crypto market observers speculated that this could result in a flood of new money entering the crypto markets if FTX creditors choose to immediately reinvest what they receive.
Crypto analyst Crypto Rover compared the FTX claim distribution and the $18.3 billion in net inflows to Bitcoin ETFs since the start of 2024.
In a separate tweet, he argued that Bitcoin’s consolidation is over and that a new bull market will ensue.
FTX Saga Finally Draws to a Close
The approval of FTX’s bankruptcy plan follows two fraught years of asset recovery and settlements following the exchange’s spectacular collapse in November 2022.
FTX’s disgraced former CEO Sam Bankman-Fried was sentenced to 25 years in prison last year over his involvement in the FTX fraud.
FTX had misled its customers and investors by co-mingling funds with Bankman-Fried’s multi-billion dollar crypto hedge fund Alameda Research.
While FTX claimants will receive 118% of the value of their claim in cash, many will receive substantially less than the value of their crypto today.
While 94% of claimants voted in favor of the plan, not all were happy.
Sunil Kavuri, the representative of the largest group of creditors, criticized the plan, saying claimants should be paid in cryptocurrencies in kind rather than in cash based on the value of the claim at the time of FTX’s bankruptcy filing.
Meanwhile, a lawyer representing some claimants said that some would receive a significant tax bill if they were paid out in cash rather than crypto.
Will the FTT Token Make a Comeback?
Despite Judge Dorsey affirming on Monday that the value of the FTT token should be zero, FTT has been pushing up recently.
FTT was the utility token of the defunct FTX exchange. According to TradingView, it was last up 20% near $3.0, a 2x rally versus its price 8 days ago.
However, if Dorsey is right, it’s not a good investment.
“I have no evidence today that the value of FTT tokens would be anything other than zero,” he said.
FTT’s market cap lasts around $1 billion, leaving plenty of room to decline.
That said, it may have taken on some sort of “meme coin” status at this point, which could ensure it retains long-term value, similar to how failed blockchain Terra’s LUNC token has been able to retain speculative value.
Perhaps FTT could have made a more lasting comeback if FTX had rebooted its exchange.
FTX CEO John J. Ray III told the WSJ in 2023 that the exchange had begun soliciting interested parties regarding a potential reboot.
That reboot would have included a substantial rebranding, but efforts were unsuccessful.
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