Finance

FTX Begins Paying Small Claims, with Bigger Payments Scheduled for 2025

1 day ago
Bitcoin Ethereum News

In late 2022, the cryptocurrency exchange FTX, which had collapsed, commenced a process of significant financial recovery for those affected by its failure and began to make partial repayments to its creditors.

Sunil, who is an FTX creditor, took to Twitter recently to talk about the repayments. He revealed that FTX has thus far paid out $800 million to 162,000 accounts. These partial repaymentsaree being made to customers with the smallest claims, as is common practice in bankruptcy proceedings. A total of $1.2 billion has been set aside for these payments.

The Current Round of Payments

FTX’s initial repayment round concentrates on paying back smaller creditors with claims under $50,000. Per Sunil’s tweet, around $800 million has already been doled out to about 162,000 accounts, which makes up about 35% of the estimated 460,000 accounts eligible for repayment. When it comes to how the money was allocated, it’s been reported that 50% of it was sent directly to the original account holders, with an equal amount going to debt acquirers, who purchased the claims from the original holders. Paying off these small creditors is a crucial first step to make things right after the FTX bankruptcy, which left many investors and users in dire straits.

The repayments come after months of legal and logistical delays following FTX’s bankruptcy declaration in November 2022. Individual users and institutional investors who constitute FTX’s creditor base have long sought some form of payback following the collapse of the exchange, which led to “real and lasting harm” amounting to billions of dollars. While these repayments are certainly a positive step, they are part of a plan that, by most accounts, has a long way to go before it is fully implemented.

Looking Ahead to 2025: Upcoming Payment Dates

As the initial payment is made to creditors owed less than $50,000, Sunil also gave some important details about how and when FTX will be paying back its larger creditors. Our next distribution goes to the record date of April 11, 2025, and that’s significant for a couple of reasons: Creditor claims above $50,000 will be in abundance, but the larger pieces of that puzzle—both individual and institutional—that are owed $50,000 and above will also be waiting in the wings.

The next round of distributions for FTX is set to take place on May 30, 2025. This round will pay out claims in excess of $50,000, as well as any claims under $50,000 that did not get paid in the initial distribution but were deemed as legally collectible by FTX. If you’re a creditor with a claim still left hanging, make sure to double-check your status and the approval of your claim before the record date for the May 30 distribution.

An essential detail to note is that the April 2025 distribution will also encompass earlier disputed claims that fall under the $50,000 threshold. If a claim was contested or in dispute before the initial record date, it’s now eligible for repayment as long as it was approved by the appeals court after the fact. This means that a number of creditors, especially those with smaller claims that were initially disputed, stand to receive a second slice of the pie in 2025 when those funds are finally distributed.

Ongoing Challenges in the FTX Bankruptcy Process

FTX’s process of paying back its creditors has not been without obstacles. The bankruptcy proceedings for the one-time giant exchange have been tied up in legal disputes, asset sales, and the hunt for missing money. FTX’s lawyers have been working with the courts to sort things out, but many of the problems relate to the vast number of people and the amount of money owed that were involved with FTX.

Besides the payments to creditors, ongoing investigations look into the actions of former executives—such as founder Sam Bankman-Fried—who is now facing several criminal charges connected with the exchange’s collapse. These probes, and the court proceedings they generate, have further delayed the distribution process but seem necessary for a full accounting of what happened.

These challenges notwithstanding, the recently resumed repayments by FTX give reason for hope to the creditors who have watched and waited for over a year. They were once told by collapsed Harbinger Capital that the situation was so bad that “there was little chance of recovery for FTX’s 1 million creditors.” Hearing anything positive coming from FTX’s executive offices was almost an impossibility.

A Long Road to Full Recovery

The road to complete repayment is still pretty murky for a lot of creditors, particularly those with high-value claims. Barring any development of this year’s remaining legal proceedings or asset sale efforts, the bulk of repayments won’t likely happen until 2026 or later. Patience will be a necessary virtue for creditors as they await the next stage of this unfolding story.

FTX’s continuing Chapter 11 bankruptcy serves as a warning for the largely unregulated cryptocurrency industry, underscoring the need for effective oversight and clear operation. In the cautionary tale that has emerged since November, we have seen one failed platform attempt to drag down several others in the crypto space. We have also seen, under bankruptcy court supervision, the realization of some $1 billion in losses by the platform’s customers, who hazily thought they were not operating in a fund that was effectively a Ponzi scheme—because under the right circumstances, it could have been a profitable platform.

With the resolution of its financial obligations to creditors continuing and more repayments now made, FTX remains several years away from fully discharging its debts. The next, and probably largest, payment to creditors won’t happen until 2025. That delays neither means that RBS is in any less of a hurry to conclude the case nor that creditors are any less eager to see the FTX bankruptcy brought to a finish.

At present, creditors and interested parties will keep an eye on the developing situation, with bated breath and crossed fingers, awaiting the next payment installment due in spring 2025.

While the distribution process is ongoing and any final resolution is still far over the horizon, the outcome is of course of vital interest to anyone involved in the case. Payments to anyone with a claim against FTX will be thoroughly dissected and studied.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news!

Source: https://nulltx.com/ftx-begins-paying-small-claims-with-bigger-payments-scheduled-for-2025/