FTX creditors with claims under $50K to receive $1.2 Billion first
FTX begins creditor payments
The cryptocurrency exchange FTX has announced the start of a 60-day repayment period during which it plans to reimburse creditors between $14.7 billion and $16.5 billion.
While these compensation amounts appear substantial, their impact on the cryptocurrency market is expected to be limited.
The first payouts will go to exchange users with claims of up to $50,000. This group will collectively receive approximately $1.2 billion, covering the principal debt and accrued interest.
Individual and institutional investors with larger claims will have access to a separate pool of $10.5 billion. However, the distribution of this pool will take more time due to the complexity of the required procedures.
Cryptocurrency exchanges BitGo and Kraken have been engaged as fund distribution managers, overseeing the process for both retail and institutional creditors.
To receive their due funds, creditors must complete Know Your Customer (KYC) verification and submit tax documents via the FTX Debtors client portal.
Creditors suffer significant real losses
Despite the significant sums being distributed, the payments are unlikely to have a major impact on the market.
According to K33 Research, approximately $2.4 billion may return to the market following the payouts.
This is because $3.9 billion of the claims were purchased by credit funds, which are less likely to reinvest in cryptocurrencies.
Additionally, 33% of the remaining claims are tied to sanctioned countries, insiders, or unverified creditors, limiting their ability to access the funds.
The most disheartening fact is that, although FTX’s reorganization plan includes compensating 98% of users 119% of their declared losses, the payments are based on the value of their assets as of November 2022, when Bitcoin was trading at around $17,000. This means creditors will miss out on significant sums and the benefits of the recent bull rally triggered by Trump.
The long-awaited FTX claims payout is set to begin on January 3, 2025, providing $16 billion in restitution to customers and creditors affected by the cryptocurrency exchange's infamous collapse in 2022.
