K33: Payouts to FTX customers may offset selling pressure from Mt. Gox and Gemini lenders

What’s new? Cash payouts to customers of the bankrupt crypto exchange FTX could create a wave of bullish buying pressure in the crypto market, according to analysts at K33 Research. FTX’s new managers intend to pay between $14,5 billion and $16,3 billion in cash to users who lost their crypto assets when the exchange collapsed in November 2022. The plan is currently awaiting court approval.

K33 Research’s report

What else is known? K33 analysts Vetle Lunde and Anders Hesleth emphasize that not all compensation payments by bankrupt crypto firms lead to bearish selling pressure. In doing so, they compared FTX to crypto exchanges Mt. Gox and Gemini.

Mt. Gox, one of the first crypto exchanges in the world, went bankrupt in 2014 as a result of a hack and only started returning assetsto customers in late December 2023. US crypto exchange Gemini continues to operate, but it owes assets to customers as a result of the bankruptcy of its broker partner Genesis, with whom they implemented the profitable Gemini Earn deposit program.

Mt. Gox and Gemini, unlike FTX, compensate clients in cryptocurrency rather than cash. The total value of their assets to be distributed is estimated at $10,6 billion at current exchange rates.

Gemini’s 1,7 billion payout is scheduled for early June, while Mt. Gox is expected to finalize its 8,9 billion asset allocation in October. As for FTX, the plan is yet to be approved by the court, but the payout is also expected to take place this year.

Analysts Lunde and Hesleth believe that on the part of Mt. Gox and Gemini clients, who will receive compensation in cryptocurrency, we should expect selling pressure, while on the part of FTX clients there will be buying pressure. At the same time, selling pressure may be neutralized by buying pressure, which will prevent the crypto market from turning towards a bearish trend.

At the same time, K33 emphasized that the timing of FTX customer payouts could be a key element in predicting their impact on the market, but it is not yet known.