- FTX to pay customers $12 billion in the coming months, courtesy of a court-approved payout plan.
- A prominent market figure has explained that recipients are likely to put funds back into the crypto market.
- New inflows are expected to trigger long-term liquidity for crypto traders.
FTX customers will start to receive more than $12 billion in payouts. In a payout plan approved in court, the exchange must credit its former customers in the coming months.
This is good news for customers, whose digital assets have been locked in the exchange since it collapsed. According to a note from Alex Thorn, the Head of Research at Galaxy Digital Holdings, an initial $1.1 billion disbursement, though small, will help Bitcoin.
The company’s asset holdings haven’t been fully recovered. However, the initial $12.6 billion promised to customers back in June, could increase to $16.5 billion once the recovery process is completed.
Market players like Benjamin Celermajer, the co-chief investment officer at Magnet Capital, said that the payouts could boost liquidity for major crypto traders . Celermajer thinks the money might flow back into the cryptocurrency market. If that happens, it could boost prices in low-liquidity markets, he added.
Did FTX Collapse Help the Crypto Market?
Even though the crypto market lost a lot of money following FTX’s collapse, the market has grown to $300 billion this year. According to reports, the bullish development is because of FTX’s collapse. Reports also stated that the market started to recover after the US Judge ordered FTX to pay its customers.
On Nov. 11 2022, FTX, one of the leading crypto exchanges at the time, filed for bankruptcy protection in the United States. Sam Bankman-Fried, the CEO of the company, recorded a drop in his net worth, which went from $26.5 billion to $16 billion, and finally to zero within a week.
Read also: FTX Fraud: Caroline Ellison Sentenced to 2 Years in Prison
The crash expectedly affected the broader cryptocurrency market. The FTT token, affiliated with FTX, plummeted, and as a result, leading assets Bitcoin and Ethereum followed suit, dropping to a two-year low on Nov. 9 2022. At report time, FTT trades at $2.26.
Sam Bankman-Fried was arrested on Dec 12 2022, and subsequently sentenced to 25 years in prison over tax fraud in March.
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