FTX begins payouts to affected creditors
FTX Begins $17 Billion Creditor Payouts With Convenience Class Claims.
FTX has commenced payouts today for creditors in the “Convenience Class,” covering claims of $50,000 or less.
Eligible creditors will receive full repayment plus 9% annual interest accrued since November 2022.
Key Takeaways
- Convenience Class Payouts: Creditors with claims ≤$50K will be repaid in cash, including 9% interest.
- Payout Partners: FTX is working with BitGo and Kraken to process these payouts, with funds reaching recipients in 1-3 business days.
- Phased Payouts: A total of $17 billion will be distributed; claims over $50K are scheduled for Q2 2025.
- Recovery Rates: Overall recovery estimates range from 123% to 138%, potentially yielding returns above original claims.
Payout Rollout and Process
FTX, under its reorganization plan initiated on January 3, 2025, has launched the first phase of creditor payouts. Eligible creditors in the Convenience Class must complete KYC verification and submit tax forms to qualify.
Those who miss the deadline may still be eligible for subsequent distributions. FTX plans to distribute $7 billion in this initial phase, with a total payout target of $17 billion. Payouts are being processed through BitGo and Kraken, ensuring that funds should reach recipients within one to three business days.
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Recovery Prospects and Market Impact
The FTX Creditor Recovery Summary estimates total claims at $11.75 billion across various creditor groups. Recovery rates for secured and customer claims vary from 100% to 142%, yielding overall recovery rates between 123% and 138%.
This suggests that many creditors could receive more than their original claims. However, if any payouts involve cryptocurrency and recipients choose to liquidate their holdings, additional selling pressure could be exerted on the market. Nonetheless, most payouts are anticipated to be in cash, which should help mitigate adverse impacts on FTX’s native token, FTT.
Conclusion & Outlook
FTX’s initiation of creditor payouts marks a significant milestone in its reorganization. With robust recovery estimates and a phased approach to distribution, the process may restore some investor confidence. However, ongoing market conditions and potential liquidation of crypto assets remain factors to watch closely.
Recently we wrote, that on February 17, the FTX Estate announced the date for its next institutional investor auction, where 11.2 million SOL tokens—currently valued at $2.06 billion—will be sold.
