What Happened At The FTX Confirmation Hearing?

Yesterday saw the FTX Confirmation Hearing, and now victims will be compensated in cash not crypto, Solana prices Price Trading volume in 24h Last 7d price movement are dropping – here’s why.

No one wants to lose money, but it happens sometimes. It can be from buying at peaks or getting rugged.

What’s painful for holders is seeing their money misused when a crypto firm or exchange goes under, as was revealed after the collapse of FTX.

The FTX Collapse And How It Shapes Crypto Today

FTX used to be the largest crypto exchange, offering various services, including spot and derivatives trading.

It was also one of the biggest investors and holders of Solana.

When FTX announced its bankruptcy in late 2022, it sent reverberations across the sphere, forcing Bitcoin, Ethereum, and Solana to record lows.

 

Mark you, earlier that year, there had been other high-profile bankruptcies, including Luna, UST depegging, and 3AC.

Therefore, the collapse of FTX served as another blow, denting confidence and consequently a global tightening of crypto regulations.

Bankruptcy Proceedings And Reorganization Plans

Two years after the bankruptcy, there is relief for holders.

The FTX estate has recovered billions from Sam Bankman-Fried, the exchange, and some of the former CEO’s associates.

There were plans to distribute funds from late this year to 2025.

Still, some weren’t happy with the estate’s latest announcement, which proposed paying out a small proportion of what was lost with assets valued at the price when the exchange collapsed.

Then, Bitcoin fell to as low as $16,000 while Solana stood at $20.

As of October 8, BTC stood at over $63,000, while Solana traded at over $140.

Yesterday, a judge in Delaware approved the FTX reorganization plan, paving the way for the distribution of assets to most victims, in full and with interest–for every dollar, there will be an 18% interest.

The estate will distribute $16 billion worth of assets.

BREAKING: 🇺🇸

FTX bankruptcy plan approved by judge, clearing the path to $16 BILLION in repayments.

SEND IT! 🚀 pic.twitter.com/RS40bAcrfd

— Radar🚨 (@RadarHits) October 7, 2024

This ruling is a massive win for some clients.

Funds will be recovered from liquidating FTX investments and capital gains since late 2022, when BTC, ETH, SOL, and other altcoins have been rallying.

Encouragingly, some United States government agencies agreed to defer claims until after victims have been compensated.

Who Wins From The FTX Settlement?

While the reorganization plan has been approved, some creditors think they are being ripped off, especially because of how their assets are valued.

According to bankruptcy laws, assets will be distributed in USD at the price it traded at the depth of the bear market in late 2022 (mentioned earlier). That’s when the exchange collapsed.

With this ruling, firms that will buy FTX assets, as per the November 2022 valuation, will reap big–not the victims.

After yesterday’s ruling, victims and creditors seem to have no other option but to accept the loss as they await repayments. 

( SOLUSDT )

So far, Solana prices remain under pressure, slipping after posting gains yesterday. It remains to be seen whether these losses will be extended in the coming days.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.