The Delaware judge approves the compensation plan, which provides refunds in fiat currency at 119% of the original value of the deposits.
On October 7, the bankruptcy court for the State of Delaware approved FTX’s compensation plan, paving the way for refunds to creditors of the failed exchange from November 2022.
The plan, presented in September and supported by 94% of creditors, promises to refund users an average of 119% of the value of their digital assets at the time of the exchange’s bankruptcy.
During a nearly six-hour hearing, Judge John T. Dorsey reviewed and dismissed all objections to the plan, including those made by companies such as Celsius and Layer Zero, as well as individual creditors. The main objections concerned the decision to issue refunds in fiat currency rather than in cryptocurrencies and the zero valuation of FTT tokens.
Brian Glueckstein, an attorney for the bankruptcy administration and partner at Sullivan & Cromwell, defended the decision to value FTT tokens at zero, arguing that they “have no fundamental value” in the absence of an operational FTX platform. Paradoxically, despite this valuation, the price of the FTT token rose by 20% following the announcement of the plan’s approval, only to fall again afterward.
Current FTX CEO John Ray stated:
“Today’s success is a result of the hard work and expertise of the professionals involved in this case, who have managed to recover billions by reconstructing FTX’s financial records and gathering assets globally.”
Although the possibility of refunds in cryptocurrencies has been excluded, the bankruptcy administration is considering the option of making distributions in stablecoins, despite objections from the SEC. Negotiations are underway with four companies to manage this potential refund method.
