Cryptocurrency exchange FTX declared bankruptcy in November 2022 and has embarked on a lengthy legal battle and bankruptcy liquidation process since then. On October 7, the U.S. court approved FTX’s bankruptcy plan, but this also means that most affected households will get back the amount of legal currency equivalent to the loss in 2022, rather than the total amount of cryptocurrency actually lost that year.

The court's decision confirms FTX Residual Asset Management's second revised bankruptcy plan, which was proposed in September and approved by 96% of creditors who voted.

Lawyers representing FTX’s remaining estate management agency said on Monday that under this plan, customers are expected to receive 118% of the value of assets held by FTX when it files for bankruptcy in 2022 as compensation in the form of cash, but the rate of compensation for some people may be Reached 140%. While FTX's settlement was more than what creditors lost two years ago, it missed out on gains from the cryptocurrency rally of the past nearly 2 years.

In a nearly six-hour hearing, Judge John T. Dorsey of the U.S. Bankruptcy Court for the District of Delaware heard the creditors’ objections to the plan, including objections from companies such as Celsius and Layer Zero, as well as some individuals. Objections from creditors.

The main dissatisfaction expressed by these creditors is that the FTX residual estate management agency decided to repay cash to creditors instead of compensating physical cryptocurrencies, and some are also dissatisfied with the valuation of the FTT token (FTT token is the platform currency launched by FTX in 2019 , it is now valued at “zero” by FTX Residual Property Management Agency). Judge John Dorsey overruled those opinions.

Although the hearing spent a long time discussing the lack of intrinsic value of FTT tokens, the price of FTT tokens rose by 55% after the news that the judge approved FTX’s bankruptcy plan.

Brian Glueckstein, a lawyer for FTX's remaining assets and a partner at Sullivan & Cromwell, said on Monday that the correct valuation of FTT tokens held by creditors is actually zero, and that any attempt to revise such a decision is "baseless." . He said:

According to expert explanations, FTT has no fundamental value. There is simply no practical use outside of the operation of FTX.com. "FTX exchange will not be restarted now and will not be restarted in the future.

FTX’s attorneys and expert witnesses also testified against so-called “property rights” objections, which argue that cryptocurrencies should be returned instead of cash. They argued that it would be impossible to return customers’ cryptocurrencies in physical form because FTX’s remaining assets simply didn’t have them.

FTX now has enough funds to compensate customers due to the liquidation of some of FTX and Alameda's investments, including the sale of about 8% of AI company Anthropic for $884 million.

When current FTX CEO John J. Ray III succeeded FTX founder Sam Bankman-Fried (SBF), the FTX treasury was almost empty, with only a small amount of cryptocurrency owed to customers, such as only 105 bits. coins (Bitcoin was worth about $17,000 at the time). In comparison, nearly 100,000 customers have assets in FTX.

Lawyers pointed out that even if the cryptocurrency owed to creditors were to be acquired on the open market, it is simply impossible to do so at the current market price. Judge John Dorsey agreed.

"I agree that the amount of compensation is calculated based on the "currency price at the time of bankruptcy"! The judge approves FTX’s bankruptcy compensation plan. This article was first published on (Block Guest).