FTX Starts Repaying Creditors After Two-Year Wait

FTX will repay creditors $14.7-16.5 billion under a Chapter 11 deal.
The company will settle smaller claims under $50,000 within 60 days.

FTX is now paying off creditors, according to a Chapter 11 reorganization plan court-approved two years after the collapse in November 2022. FTX, on January 3, 2025, sent out its first wave of repayment notices to exchange creditors whose claims are under $50,000. Crypto firms Kraken and BitGo are managing this initial phase and expect to complete it within 60 days.

The restructuring plan aims to allocate between $14.7 billion and $16.5 billion to customers and creditors. Miraculously, the creditors may get as much as 119% of their claimed account value as of the date of the collapse of the exchange, which is good news for the victims of one of the biggest crypto bankruptcies in history.

The authorities will later release details on how they will repay creditors holding higher amounts. Importantly, the plan specifies that valuations as of November 2022 will apply to cryptocurrencies. Some creditors have been very critical of this choice since prices for cryptocurrencies, including Bitcoin, have increased more than 500% since then, alone for Bitcoin.

Steps Further in FTX’s Bankruptcy Recovery

FTX collapsed due to a serious liquidity crisis, and its former CEO, Sam Bankman-Fried, received a 25-year prison sentence for fraud. However, the latest news suggests the president might pardon him, as he donated millions to politics in 2020. Elon Musk recently sparked the situation with his tweets, but no official statements have been made yet.

Market analysts are observing the repayment of FTX because it might add liquidity to the crypto market, which will raise the price. The global crypto market cap has already risen 2.5% in the last 24 hours after trading Bitcoin at over $98,000.

As convenience class repayments are calculated, the FTX estate continues to communicate with other classes of creditors for claims. Through the collection of over $14 billion, the estate is going to fund much more exhaustive repayment efforts. The report will soon include details on payments to broader categories of significant creditors.

The repayment strategy by FTX, which is a testament to its transparency and efficiency, thus marks the first step toward further financial recovery. This is the latest development in the long-winding bankruptcy procedures and reiterates the commitment of the estate to fairness and clarity for all affected users.

Source: https://www.livebitcoinnews.com/ftx-starts-repaying-creditors-after-two-year-wait/