The industry continues to deal with the collapse of Sam Bankman-Fried’s FTX exchange. Hopefully, the long wait for FTX’s former crypto exchange users will soon come to an end. After two years of being unable to access their funds, the failed exchange is preparing to distribute more than $1.2 billion in repayments.
According to Sunil, an FTX creditor who is a member of the FTX Customer Ad-Hoc Committee, the largest group of over 1,500 FTX creditors, says that the crypto exchange is expected to commence repaying claims of up to $50,000 after January 20.
FTX repayments
Initial Distribution Schedule
Claims < $50k = $1.2bn
Jan 20th: FTX has given until 20th Jan to fulfil pre distribution requirements for initial distribution
Repayments likely won’t start before then
Feb 25: Likely (up to 4th Mar)
— Sunil (FTX Creditor Champion) (@sunil_trades) January 12, 2025
Exchange users who are owed up to $50,000 in digital assets have until January 20 to satisfy their repayment obligations. Sunil wrote, “Jan 20th: FTX has given until 20th Jan to fulfill pre-distribution requirements for initial distribution. Repayments likely won’t start before then.”
Notably, the repayment model repays claimants based on crypto prices at the time of bankruptcy. Creditors have criticized the move, especially because many token prices have gone up exponentially since. For instance, Bitcoin has surged by over 370% since November 2022.
FTX repayment effects on the crypto industry
The crypto industry is already excited about US President-elect Donald Trump’s inauguration on January 20. This has prompted anticipation of increased regulatory clarity in the crypto sector and the potential acceptance of the Bitcoin Act. The legislation suggests the establishment of a Bitcoin reserve in the United States, the world’s largest economy.
Certain industry observers believe that January 20 could potentially spark the next phase of the 2025 crypto market cycle, which could result in Bitcoin surpassing $200,000 when combined with the forthcoming FTX repayments.
According to the crypto exchange’s restructuring plan, which was approved in October 2024, 98% of FTX users could expect to be paid 119% of the declared value of their funds.
Some crypto investors anticipate the repayments to lead to increased market volatility.
Additionally, there is also a prediction that the exchange’s creditors could behave similarly to Mt. Gox creditors, who received a total of 59,000 Bitcoins worth nearly $4 billion and didn’t sell.
Notably, in December, BitGo and Kraken, two crypto firms, announced that they would support the distribution of recoveries to users. If all users submit comprehensive claims, the exchange is expected to distribute approximately $16 billion.
The never-ending FTX drama
Investors are still waiting to see if the crypto exchange keeps its word. Since it kicked off the infamous crypto winter, the exchange’s reputation has continued to be hit with various accusations.
FTX Creditor Linda Favario has filed a complaint with the US Bankruptcy Court over the extravagant spending of the exchange’s administrators. Linda Favario drew the court’s attention to the excessive expenses in her letter dated December 17, 2024, noting that it is a customary practice among bankruptcy professionals.
She explained, “My independent research suggests that these issues are not isolated but part of a broader pattern of excessive and unnecessary spending that contravenes the DOJ’s “Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses.”
Notably, similar concerns were raised by the bankruptcy judge John Dorsey during the December 12, 2024, hearing. Dorsey highlighted three questionable expenses in that hearing, including an $8,251 airline ticket, a $134 Uber ride, and a $120 hotel room meal.
Linda Favario requested that the court broaden the scope of the expenses review. She identified several extravagant expenses and provided evidence to support them.
Additionally, there have been allegations that the exchange’s bankruptcy estate strongly opposes Backpack Exchange’s claim to acquire its EU arm. The Dubai-based exchange announced a $32.7 million acquisition of FTX EU to expand its derivatives products, while FTX’s US estate claims ownership of the European business are still unsettled.
Backpack claims it purchased FTX EU from insiders Patrick Gruhn and Robin Matzke, who allegedly concluded the transaction in May. Payments were purportedly made in accordance with the terms of the sale. Meanwhile, FTX’s estate claims that FTX Europe AG still owns FTX EU’s shares and that the insider transfer did not occur.
With all this going on, once the FTX creditors receive their pay, there will be a sigh of relief. With this crypto exchange, you can never be 100% sure. If the repayments go forward as planned, the industry will breathe a collective sigh of relief.
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Source: https://www.cryptopolitan.com/ftx-distribute-creditors-trump-inauguration/