Bankrupt cryptocurrency exchange, FTX, has received approval for its compensation plan from a United States court to repay its customers after two years of collapse. This comes as a welcome news to the victims who have been looking forward to this day. However, some have voiced concerns about the value of their assets to be received and whether it will compensate for the market shift from 2022 till date.

Recall that five months ago, in May, the body managing the bankrupt exchange announced its plan to compensate customers, estimating that over $16 billion in digital assets could be repaid to the victims.

Up to 98% of its Creditors to Receive Refunds

U.S. Bankruptcy Judge, John Dorsey, approved the decision on October 7 during a hearing in Wilmington, Delaware. According to the plan, up to 98% of creditors who held accounts containing less than $50,000 would be refunded up to 118% of the total value of their account as of November 2022.

Interestingly, this set of clients will receive their repayments within two months (60 days) after the plan start date. However, at the time of writing, it is still unknown when the plan is set to start. According to the FTX managing body, the exchange has between $14.7 billion and $16.5 billion available to repay its customers. These funds were recovered in cash and crypto assets after the FTX giant collapse.

Meanwhile, FTX is still talking to the United States Department of Justice regarding the $1 billion seized during the criminal trial of the incarcerated CEO, Sam Bankman-Fried. According to court documents, FTX shareholders could also benefit from the refund, receiving up to $230 million from the seized funds.

FTX Creditors Voice Concerns

While this was described by FTX as a “victory for creditors,” the same creditors have voiced their disappointments about the value of the repayments to be received.

According to them, FTX collapsed in November 2022, a time when the global crypto market was undergoing a significant recovery. At the time, Bitcoin was trading between $16,000 and $17,000 but has surged to about $62,000 today. Thus, customers complain that the repayment plan does not mirror the current market value and demand more payments.

Clarifying the situation, FTX stressed that it cannot refund the exact digital assets deposited by customers in comparison to today’s value because those assets were already squandered by the convicted CEO.

FTX vs. Mt. Gox Claim Distribution

In a statement, FTX CEO, John Ray, praised the team behind recovering FTX funds. He said, “Today’s achievement is only possible because of the experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX’s books from the ground up and from there marshaling assets from around the globe.” 

Notably, FTX claim distribution is almost double that of Mt. Gox which distributed about $8.8 billion to its creditors this year.

Source: Twitter

Experts comment that since the FTX refund would be in cash and not in crypto, it could translate to bullish for the overall market since creditors may flock to rebuying crypto upon receiving their funds as opposed to selling off if they receive it in crypto as in the case of Mt. Gox.

The post FTX Set to Repay Customers Following Approval From Court, Who Gets What? appeared first on Coinfomania.