Why FTX's proposed repayment of 90% of recovered assets does not equal 90% of customer losses

 

KEY LESSONS

This week, the defunct cryptocurrency exchange FTX offered a plan to reimburse users up to 90% of distributable assets.

Distributable assets are the sums of money that FTX has been able to recoup, not the actual sums of money that consumers have lost.

According to certain FTX creditors, the actual recovery for customers may be less.

In order to avoid potential clawback, those who withdrew more than $250,000 from FTX in the days before its collapse will be able to pay a 15% charge on those money.

The biggest opportunity cost for FTX clients will be refunds that will be issued in dollars rather than cryptocurrency, as the price of cryptocurrency has recently started to rise.

By December 16, FTX expects to submit the proposal to a bankruptcy court in the United States.

failure of a crypto exchange In its bankruptcy proceedings, FTX presented a revised plan to distribute 90% of distributable funds—money it has made—to former clients. However, this does not guarantee that they will receive 90% of the money they lost.

1 By December 16, FTX plans to submit the proposal to a bankruptcy court in the United States.