banner

FTX Settles with CFTC: Impact on Creditors and Token Holders

FTX, the collapsed digital asset exchange, has reached a pivotal settlement with the Commodity Futures Trading Commission (CFTC). This agreement, pending court approval, marks a crucial moment in the ongoing FTX bankruptcy saga that has captivated the crypto industry since late 2022.

The settlement involves subordinating a $4 billion CFTC claim and introduces a mechanism for additional compensation to affected cryptocurrency holders.

FTX Settlement with CFTC & Impact on Creditors

FTX, now defunct, has settled with the CFTC in a significant development for its bankruptcy case. The agreement, awaiting court approval, subordinates the $4 billion CFTC claim to creditor claims and interest.

Under this settlement, the CFTC’s $4 billion claim will be allowed but ranked below all other creditor claims and interest payments. Any funds initially destined for the CFTC will instead go to a Supplemental Remission Fund. This fund aims to provide extra compensation to adversely affected cryptocurrency holders, but only after all creditors are paid with interest and if surplus funds remain.

The settlement follows a District Court order by Judge Kaplan, which imposed a $4 billion disgorgement and $8.7 billion restitution to creditors. FTX debtors will receive dollar-for-dollar credit against the disgorgement order as part of the agreement.

A notable aspect of the settlement is its recognition that creditors with cryptocurrency-related investments were particularly harmed by the alleged illegal conduct. This recognition is partly due to over 200 victim statements sent to Judge Kaplan by FTX victims.

Controversy Among Creditors

Despite the settlement, some creditors argue that the FTX bankruptcy estate is effectively using victims’ assets to pay government fines. These fines, they contend, result from FTX’s misrepresentations to the CFTC and are being paid before fully compensating the victims at current market prices.

Restructuring Plan and FTT Token Holders

The FTX restructuring plan has encountered obstacles, especially for holders of the FTT token. The official committee of unsecured creditors announced that FTX debtors are using Kroll, a third-party administrator, to distribute voting materials and comments to creditors and customers.

Users who filed claims solely based on FTT holdings are automatically considered to reject the restructuring plan and are not given voting rights. However, these claimants can still opt into the plan releases. Customers with claims involving fiat currency, other tokens, or cryptocurrencies beyond FTT should receive a ballot for voting on the plan.

Conclusion

The FTX settlement with the CFTC is a significant step in its bankruptcy case, with implications for creditors and affected token holders. While the agreement aims to provide additional compensation through a Supplemental Remission Fund, it has sparked controversy among creditors regarding the use of victims’ assets for government fines. The restructuring plan also presents challenges, particularly for FTT token holders.

banner

Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

Follow Us

Top Selling Multipurpose WP Theme

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

banner

Crypto feed news

Our team of crypto enthusiasts and market mavens is on a mission to deliver the latest, juiciest, and most insightful updates from the ever-evolving world of cryptocurrencies.

@CryptoFeedNews 2023 All Right Reserved. Designed and Developed by TheDevThingz

Social Media Auto Publish Powered By : XYZScripts.com
Skip to content