FTX's Repayment Plan: Bitcoin Holders Face Major Loss

FTX's repayment plan, set to commence on February 18, will fully refund creditors' claims, including interests, through BitGo. However, customers will not benefit from current market prices for their FTX holdings, as the repayment plan will refund crypto holdings at November 2022 prices.

This means that Bitcoin (BTC) holders on the now-defunct crypto exchange will only receive repayment capped at $20,000 per Bitcoin for 98% of users. Today, Bitcoin is trading at nearly five times its 2022 market price, at $97,988, with a slight increase of 0.28% in the past 24 hours.

Ethereum (ETH) holders, on the other hand, stand to gain $2,500 from their FTX holdings. Although Ethereum's current price is $2,698, a significant gap of nearly $200 from its 2022 price, the loss is not as severe as that of Bitcoin holders.

Many traders on X had mixed reactions to the creditor repayments, with some commenting on the relative stability of Ethereum's price compared to Bitcoin's skyrocketing value over the past two years.

The reorganization plans became effective on January 3, requiring creditor repayments to be made within 60 days. Court filings revealed that the defunct crypto exchange has around $13 billion in payout reserves. However, the estate has filed to withhold half of the total amount for disputed claims, leaving the exact sum allocated for Bahamas creditor repayments unknown.

FTX collapsed in 2022 under the leadership of founder Sam Bankman-Fried. Investigations into the platform uncovered corporate mismanagement and fraud allegedly orchestrated by Bankman-Fried, who was later convicted of multiple charges and sentenced to 25 years in prison.