OKX Transfers 6.275M USDT to FTX/Alameda: Creditor Repayments Begin?

• PeckShield flagged a $6.27M USDT transfer from OKX to an FTX/Alameda wallet.
• FTX’s $12.7B creditor settlement includes $8.7B restitution and $4B disgorgement.
• Repayment in cryptocurrency faces potential SEC opposition over stablecoins.

Blockchain security firm PeckShield observed transfers from cryptocurrency exchange OKX to wallets linked to the bankrupt FTX exchange. Early Friday morning, an Alameda/FTX-labeled address received 6.275 million USDT from OKX. The reason behind this transfer remains unclear, but it could indicate the start of FTX creditor repayments.

In July, FTX reached a $12.7 billion creditor settlement with the Commodity Futures Trading Commission (CFTC), pending court approval. This marked an end to a 19-month legal battle between the CFTC and the exchange. A few weeks later, New York Judge P. Kevin Castel approved a consent order requiring FTX to pay defrauded investors $12.7 billion in restitution.

Read also: FTX Reorganization Plan Wins 95% Creditor Approval

The settlement includes $8.7 billion in restitution and $4 billion in disgorgement. FTX’s reorganization plan aims to provide a 118% return to 98% of creditors, particularly those with claims under $50,000.

CFTC’s Lawsuit Against FTX

In December 2022, the agency filed a lawsuit against FTX, its former CEO Sam Bankman-Fried, and its sister firm Alameda Research. CFTC accused the exchange of fraud and misrepresenting FTX as a digital commodity platform.

Read also: Coinbase CLO Calls Out SEC’s Unclear Stance on FTX Repayment Plan

Meanwhile, many creditors have expressed a desire for repayment in cryptocurrency, as the market has increased by 166% since the bankruptcy filing. This preference could pose challenges, as the SEC is ready to oppose any plan to repay creditors in stablecoins. The SEC has maintained its authority to challenge crypto-related transactions, including those involving stablecoins pegged to the U.S. dollar.

While a specific stablecoin has not been selected for repayment, the two largest stablecoin issuers, Tether (USDT) and USD Coin (USDC), have been under consideration. However, both issuers have faced their own obstacles.

Tether has been under scrutiny for not providing audited financial statements. Meanwhile, USDC issuer Circle has a more transparent reputation but experienced a $3.3 billion exposure. The recent USDT transfer from OKX to an FTX/Alameda wallet could suggest a leaning towards Tether’s stablecoin for creditor repayment.