HomeCryptoFTX: Reimbursing its clients could create $16 billion in buying volume

FTX: Reimbursing its clients could create $16 billion in buying volume

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A study by K33 Research reveals that the repayment of FTX creditors could generate significant buying pressure in the cryptocurrency market, potentially offsetting the selling demand from the repayments of Mt. Gox and Gemini.

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FTX claims could create upward pressure on the cryptocurrency market

A recent study from K33 Research suggests that repayment of FTX creditors could generate multibillion-dollar buying pressure on the price of Bitcoin and other cryptocurrencies.

The liquidators of the old exchange platform have chosen to reimburse its customers in cash, that is, with the dollars recovered from the sale of assets held by FTX, including approximately $7.5 billion in SOL tokens and $1 billion in GBTC, Grayscale’s spot Bitcoin ETF. These sales, carried out several months ago, have already had a downward effect on the price of cryptocurrencies.

Thus, the funds blocked since November 2022 will be returned to companies and investors who have known the market for at least 1 and a half years, who could use these funds to repurchase the assets they held during the FTX bankruptcy.

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FTX owes a total of nearly $14.5 billion to its creditors, including $3.1 billion to the 50 largest customers. Recently, the company announced that it could repay up to $16.3 billion, to cover 118% of the amount owed to creditors claiming less than $50,000.

Additionally, the K33 Research report states:

“While Mt. Gox and Gemini’s creditor repayments represent downward pressure on the market, FTX’s cash repayment can be seen as upward pressure. »

Indeed, unlike FTX, Mt. Gox and Gemini chose to repay their creditors in kind, that is to say with the same assets they held.

Mt. Gox, whose funds have been blocked for almost 10 years, is expected to finalize the repayment of $8.9 billion in BTC by October 2024. For its part, Gemini, with $1.7 billion blocked since the bankruptcy of Genesis, should repay its creditors in cryptocurrencies during the month of June 2024. These could thus result in nearly $10.6 billion in seller volume..

Although these redemptions do not occur at the same time, K33 Research suggests that the buying volume created by FTX customer refunds could at least neutralize the selling volume created by the Mt. Gox and Gemini refunds.

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The next step for FTX creditors

From now on, lingering uncertainty over FTX customer reimbursement lies in approval of FTX reorganization plan by the United States Bankruptcy Court.

According to K33 Research, once this plan is approved, FTX will be able to reimburse its customers in just 2 months. However, this approval could still take several months and could be finalized during the last quarter of 2024.

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In April 2024, Sam Bankman-Fried (SBF) appealed his 25-year prison sentence, handed down on March 28, by filing a petition with the Southern District Court of New York. The case must now go through the 2nd Circuit, with no date set for further events.

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Source : K33 Research

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