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FTX Bankruptcy Estate Compensation Details
FTX’s bankruptcy estate announced substantial compensation for creditors and customers, ranging between $14.5 billion to $16.3 billion. However, this compensation does not extend to holders of FTX’s ill-fated FTT token. Previously considered the defunct exchange’s native token on Ethereum, claims related to FTT are slated to be “canceled or released,” as indicated in the plan filed in the Delaware bankruptcy court.
Compensation Breakdown and NFT Return
One notable development is the provision for NFT holders who were affected by the collapse of the FTX NFT platform. These individuals are set to reclaim their trapped assets. Additionally, creditors with allowed claims under $50,000 stand to receive 118% of their owed amounts if the court approves the plan. The payment reflects the USD value of crypto prices at the time of FTX’s downfall in 2022, offering a slight interest on the funds lost by customers 18 months ago.
Prior to the bankruptcy, creditors and customers who lost FTT were positioned to receive cash payments based on their holdings. The reorganization plan filed in December includes provisions for returning NFT-related assets, such as JPEGs, to the affected parties.
Sam Bankman-Fried’s Legal Troubles and Asset Ownership
The founder and former CEO of FTX, Sam Bankman-Fried, faced legal repercussions, including a 25-year prison sentence for malpractices involving the misappropriation of $8 billion from customers. Bankman-Fried diverted funds from the exchange for personal gains, including real estate investments in the Bahamas, venture funding, and political contributions. Notably, his wealth, amounting to an estimated $26.5 billion, largely comprised ownership in FTX and FTT.
FTT’s decline mirrors the downfall of FTX in November 2022, manifesting in a significant loss of value. Bankman-Fried’s trading firm, Alameda Research, held $4 billion worth of FTT on its balance sheet, which directly impacted the token’s plummet in value. Consequently, investor confidence waned, leading to a financial crisis that ultimately exposed FTX’s lack of reserves to cover customer assets.
Market Impact and Cryptocurrency Value
Following FTX’s bankruptcy filing, FTT experienced a drastic drop in value, plunging 97% from its previous all-time high to $2.62 per token. An upward trend in FTT’s value intermittently occurred in response to bankruptcy-related developments, with the current value standing at $2.14, according to CoinGecko.
Aside from its market impact, FTT was instrumental in inflating the balance sheets of Bankman-Fried’s business ventures. Noteworthy transactions include a $30 million payment, predominantly in FTT, to former NFL star Tom Brady and supermodel Gisele Bündchen for their participation in FTX commercials.
Sources: Reorganization Plan, CoinGecko, Securities and Exchange Commission
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