FTX clients are enjoying a unique advantage, yet others remain frustrated for various reasons.
Oops, you missed this update: FTX, the controversial crypto exchange that has been associated with fraud and a significant setback for the whole cryptocurrency sector, has disclosed that most users who had money frozen on the platform will be reimbursed, along with interest.
That's quite astounding. Creditors don't usually get back their full amount in bankruptcy proceedings, and it frequently takes years to recoup even a fraction of their losses.
Yet, for the FTX customers, there's a pang of regret over what could have been.
Here's the deal: If you'd had one bitcoin in an FTX account in late November 2022, it was valued at approximately $17,500. Two months ago, when bitcoin reached its all-time high, it was worth $73,700.
Today, it's worth more than $61,000.
Hence, if you'd been able to keep that bitcoin, its value would have doubled at the very least.
No Luck, Tom Brady
The astonishingly rapid asset recovery is rather unexpected given the disarray of FTX when it was handed over to John Ray III, the restructuring specialist steering the bankruptcy. Ray, who previously handled Enron's liquidation, described FTX as a poorly managed company with almost no structural financial records. In other words, a total wreck.
Surprisingly, Ray's team estimates that 98% of FTX creditors will receive roughly 118% of their claimed amounts. They managed to locate all of FTX's crypto and other holdings and appointed a financial manager to sell them. Because this entire process took some time, the booming crypto market recovered and increased the value of FTX's substantial crypto holdings, allowing the estate to comfortably reimburse its customers.
Consequently, that single bitcoin holder would receive around $20,650 following a year and a half of being unable to access their $17,500 in bitcoin.
Think it's all happy endings for everyone? Not quite! FTX's shareholders, such as Tom Brady and private equity firms including Sequoia Capital, stand to lose all their stakes in the once successful cryptocurrency startup. Although FTX stated they had as much as $16 billion to distribute, customers and the government come first in line for payment.
What about SBF?
Sam Bankman-Fried, the former CEO and founder of FTX, received a 25-year prison sentence for embezzling customer funds and misusing them on different endeavors.
From the moment his crypto empire crumbled, SBF has been trying to convince people that FTX wasn't actually insolvent and that the money was simply not liquid enough. If given more time, he stated, he could have returned everyone's money …
Well, that's a rather outlandish assertion.
Sure, the cryptocurrency market rebounded, but that's partly because the industry could shift the blame for the collapse onto SBF.
The prosecutors and the judge were unconvinced by SBF's claim during the sentencing hearing that the lack of harm to customers made his actions justifiable.
This argument seemed to really annoy Ray, who's spent the past year and a half untangling the mess left by Bankman-Fried and recovering FTX's globally dispersed assets. In a letter to the court before Bankman-Fried’s sentencing, Ray wrote that the company Bankman-Fried left behind was "neither solvent nor safe."
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Despite the positive news for FTX customers, many others in the business world, such as Tom Brady and private equity firms, are facing significant losses, as their stakes in the cryptocurrency startup are at risk.
The successful reimbursement of FTX clients' funds and the potential doubling of their initial investment in bitcoin highlights the importance of financial management and transparency in the business world.
Source: edition.cnn.com
