We have reached the seventh step, with the eighth step set for the FTX Bankruptcy Committee to commence refunds to the victims it owes. The FTX bankruptcy, which caused a significant crash in the cryptocurrency market in November 2022, is approaching its conclusion. Today, we will discuss both the final phase and the anticipated market movements triggered by the FTX refunds.
FTX Creditors Announcement
FTX opened its Customer Claims Portal long ago. This portal provides guidance for victims regarding the refund process, which involves eight stages, by delivering necessary documents and forms. Just a few hours ago, the FTX Bankruptcy Committee announced the activation of a screen for “defining tax requirements before refunds” on the portal. Creditors can log in to the system and complete the final step before refunds with the help of the information texts guiding them.
Investors who completed their KYC information and verified their account balances had to provide proof of claims. Recently, they were asked to vote on the bankruptcy plan, which has also been completed. Now, the seventh step will involve defining tax requirements, followed by the likely start of refunds within 40 days.
The court-approved bankruptcy plan had received support from almost all victims.
What Will Happen to FTT Coin?
Nothing will happen. The Bankruptcy Committee had negotiated with at least three potential buyers for the sale of the FTX exchange up until the final stages. However, due to legal obstacles, these negotiations have fallen through. Speculators began generating interest in FTT Coin, claiming that the exchange could be sold and that negotiations had gone well. Yet, we have previously stated that FTT Coin would become worthless regardless of the exchange’s sale.
The supply of FTT Coin is largely held by investors, and creating a new token instead of FTT Coin would take mere seconds for new buyers. As illustrated in the graph, altcoins targeting below one dollar will likely become history following the FTX refunds. Alternatively, like LUNC, they may survive as meme coins generating a limited amount of trading volume.
Despite potential speculative rises due to rumors, long-term prospects remain extremely risky.
FTX Refunds and Crypto Bull Market
FTX faced challenges even after its bankruptcy, affecting the cryptocurrency market. Why? The Bankruptcy Committee rapidly converted existing cryptocurrencies into cash. These sales during an already declining market led to even deeper lows. Now, recall the stress of those days and envision the opposite scenario occurring in the next three months.
Investors are receiving refunds for altcoins sold at low prices. A significant portion of the refunds will flow to investors interested in altcoins, particularly Sam Coins (e.g., SOL, NEAR), amounting to billions of dollars. What can be expected as a result?
Investors are likely to begin exchanging billions of dollars in cash refunds for altcoins through cryptocurrency exchanges in the last quarter. This scenario is the complete opposite of the impact from the Mt. Gox sales. Unlike previous cases where billions of dollars were withdrawn from markets, this time, billions will be pumped into the markets.
