Cryptocurrency markets have been heavily influenced by FUD due to MTGOX and German BTC sales. However, investors are overlooking the potential liquidity returning to the market from FTX refunds, which could surpass the impact of MTGOX and German sales. So, what is the current status of FTX refunds?
FTX Claims and Crypto Surge
Many investors lost billions of dollars in the FTX collapse. FTX quickly liquidated its remaining cryptocurrencies, and the bankruptcy committee will start issuing refunds. Most refunds will be in cash, and a significant portion of the recipients are active crypto investors. This means that “refunds could return to crypto”—yes, this is the expectation.
For investors expecting refunds of thousands or hundreds of thousands of dollars, the coming months present an attractive environment for continued growth. Interest rate cuts, US elections, strengthening ETF entries, ETH ETF, and many other developments await us. It wouldn’t be surprising if investors use these funds to enter altcoins.
We are talking about a potential influx of nearly 12 billion dollars. This amount surpasses MTGOX refunds. Moreover, MTGOX creditors will also receive a certain amount of cash instead of BTC. This could mean massive gains returning to cryptocurrencies.
Current Status of FTX Refunds
According to recent court filings, the FTX exchange reached a $12.7 billion settlement with the CFTC, pending approval from a Delaware judge. In 2022, the CFTC filed fraud charges against the exchange, former FTX CEO Sam Bankman-Fried, and affiliated Alameda. Amid potential multi-billion dollar fines, the CFTC agreed to receive nothing as long as FTX adheres to its restructuring plan.
This means those awaiting refunds will receive more money since no payment will be made to the CFTC. The company announced its restructuring plan in May and stated that they plan to give at least 118% of the allowed claims to 98% of their creditors.
The voting on the repayment plan will be completed by August 16. Refunds will then begin. However, many stakeholders, including representatives of the largest creditor groups, are requesting in-kind payments instead of cash. This may not be very feasible since the company liquidated a significant portion of its assets at lower levels. If this issue is resolved, the refund process could start before the end of August.
