The exchange that left thousands of investors in limbo has finally received the green light from the court to begin repaying what it owes!
Yes, you heard that right! The users who had "locked" funds in their accounts will finally get them back. However, beyond the fact that people will get their money back, this positive development could likely impact the cryptocurrency market as well.
FTX
As you may have heard, a U.S. court decided that FTX can begin repaying its users after a lengthy legal battle that lasted nearly two years. And we're not just talking about returning the funds that were locked on the platform; there will also be interest on the payments! Does that mean users will get more money? Exactly!
Now, some of you may be thinking, "Okay, but why did it take so long?" A fair question! The truth is, there were various legal hurdles, as well as a legal dispute with the Commodity Futures Trading Commission (CFTC). However, all that has been resolved, and in May, it was announced that the exchange’s users will get 100% of their money back.
Okay, so what happens now? you might ask. Well, FTX must first establish a Trust that will manage the payments. This may take a bit of time, but the important thing is that the process is moving forward, and the funds will go where they need to. And in case you're wondering, we're not talking about a small amount. Estimates suggest that the funds to be distributed range between $14.7 and $16.5 billion. Yes, you heard that right!
The CEO of FTX has stated that they are preparing the final details and will hire specialized personnel for the payment process. "Is it really that difficult?" Well, considering we're talking about repayments to thousands of users in over 200 countries, you can't exactly call it easy!
BITCOIN
“But what does all this really mean?” you might ask. “How will Bitcoin be affected by FTX?”
The collapse of FTX marked the bottom of BTC in the bear market at $15,500. Could this mean that after everyone gets their money back, we could reach a new all-time high? Over the past week, BTC has been doing okay, and on a monthly basis, we are up almost 16%. I don't believe it will but it will help.
It seems that FTX will pay the compensations in cash. But what exactly does that mean?
Those users who had cryptocurrencies on the platform during the bankruptcy will receive compensation in CASH, equivalent to the value of their coins at that time. That is, at the time when the exchange closed.
So, if someone had 1 Bitcoin, they will get back approximately $16,000, which was the value of the coin in November 2022.
And what difference does it make if they receive the compensation in crypto or cash? you might ask now.
It makes a big difference! If the compensation were in crypto, what would most people do with it right now? They would sell immediately! Since the market is almost 3-4 times higher than it was back then.
However, now that they will be receiving cash, the situation changes. Let me explain. Most investors consider this money lost. So, when they get it back now, it’s very likely that they will reinvest it in some cryptocurrency. And that could potentially have a positive impact on the market. If they don't then crypto wont be affected at all.
Of course, getting back your crypto now would be better because many of them are worth several times more than they were in 2022. But pause for a moment and consider that FTX had zero BTC left because everything was liquidated or buried in some ledgers that might help SBF get back on his feet when he’s out in 20 years or so, At the end of the day cash is fine because the alternative would be nothing.
Posted Using InLeo Alpha