FTX to Resume Creditor Repayments in Late September as Market Eyes Liquidity Boost

FTX will begin its next round of creditor repayments on September 30, following a court-approved reduction in its claims reserve, potentially unlocking $1.9 billion for distribution.

FTX Trust Updates Payout Plan

FTX has announced that it will begin its next round of creditor repayments on September 30, with August 15 set as the record date for eligible claim holders. The collapsed crypto exchange has already returned approximately $6.2 billion to former customers across two previous distributions earlier this year.

A key development enabling the upcoming payout is the bankruptcy court’s approval to reduce FTX’s claims reserve from $6.5 billion to $4.3 billion. This decision frees up an additional $1.9 billion that may be distributed in the next tranche, although FTX has not confirmed the exact amount that will be disbursed on September 30.

BitGo, Kraken, and Payoneer have been appointed to oversee and execute the repayments.

Overall Repayment and Creditor Recovery

FTX’s broader repayment strategy aims to return between $14.7 billion and $16.5 billion to creditors. In its most recent distribution on May 30, the exchange prioritized customers with claims of $50,000 or less, also including 9% annual interest dating back to the bankruptcy filing in November 2022.

Nearly 98% of eligible creditors are expected to recover at least 119% of their claim values based on 2022 prices. However, some creditors have voiced dissatisfaction with the plan, arguing that the rapid rise in crypto asset prices since then has left them shortchanged in real terms.

Market watchers suggest that the disbursements, particularly to retail users, could inject fresh liquidity into the crypto sector, especially with altcoins.

Legal Dispute Over Restricted Jurisdictions

The FTX Recovery Trust recently attempted to impose limitations on creditor claims originating from countries it classified as “restricted jurisdictions,” including China, Russia, Saudi Arabia, and Pakistan. A July 4 court motion proposed immediate forfeiture of such claims, sparking backlash from affected creditors.

On July 23, the bankruptcy court acknowledged these objections and ordered modifications to the motion. The revised plan now eliminates the clause for immediate forfeiture and allows creditors from restricted regions to transfer claims through alternative jurisdictions.

Legacy of Collapse

FTX, once among the most influential names in crypto, collapsed in late 2022 following revelations of financial misconduct involving founder Sam Bankman-Fried. In 2023, Bankman-Fried was convicted on seven counts of fraud and conspiracy and sentenced to 25 years in prison. Reports indicate his sentence could be reduced by up to four years for good behavior.

The September payout marks another key step in the drawn-out bankruptcy resolution as FTX seeks to close one of the most high-profile collapses in crypto history.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice