By Nermeen Nabil Khear TLDR
- FTX will begin repaying major creditors $11.4 billion starting May 30, 2025
- Claims are valued at November 2022 prices, when Bitcoin was worth 80% less than today
- Smaller creditors under $50,000 have already begun receiving payments
- The company faces billions in disputed or fraudulent claims that may delay full distribution
- Despite controversy over valuation dates, creditors are expected to receive 118-119% of their claims in cash
Nearly two and a half years after its collapse, cryptocurrency exchange FTX will start repaying its major creditors on May 30, 2025. The company has amassed $11.4 billion in cash for distribution to those with claims exceeding $50,000.
This marks a key milestone in the lengthy bankruptcy process that began in November 2022. The exchange imploded after revelations that founder Sam Bankman-Fried had misused customer funds to prop up his hedge fund Alameda Research.
Smaller claimants with amounts below $50,000 have already started receiving their money. About 98% of these minor creditors were paid within two months of the repayment plan’s activation.
FTX’s bankruptcy attorney Andrew Dietderich confirmed the payment timeline in court this week. The estate is ready to begin distributing funds to larger creditors, including investment firms and institutions.
FTX’s Path from Collapse to Repayment
The company has overcome huge hurdles to reach this point. Bankruptcy Judge John Dorsey approved FTX’s payout plan in October 2023, setting the stage for these repayments.
CEO John J. Ray III, who previously handled Enron’s dissolution, has led the asset recovery efforts. His team reclaimed between $14.7 billion and $16.5 billion in assets by selling stakes in tech companies, property holdings, and digital currencies.
This successful asset recovery means FTX now has more money than its $11.2 billion in liabilities. The approved restructuring plan should allow creditors to receive 118-119% of their claim value in cash.
However, many creditors remain unhappy with how their claims are being calculated. All cryptocurrency holdings are valued based on November 2022 prices, when Bitcoin traded between $16,000 and $21,000.
Since then, Bitcoin has increased by about 500%. Other cryptocurrencies have seen even more dramatic gains, with Solana up 650% and XRP rising 450% during the same period.
Sunil Kavuri, representing the largest FTX creditor group, acknowledged mixed feelings about the repayments. “It will definitely give closure to many affected by this horrendous ordeal,” he said. “But also, repayment is at petition date prices…so holders are not at full recovery in crypto terms.”
Some creditors had hoped to receive payment in cryptocurrency rather than cash. A few have pursued litigation seeking crypto-denominated repayments, though their chances of success appear low after Judge Dorsey enforced cash settlements.
The estate is also dealing with an overwhelming number of questionable claims. Dietderich described facing “27 quintillion” total submissions, with billions deemed fraudulent or inflated.
Resolving these disputed claims is becoming urgent. While creditors wait for payment, they accrue 9% annual interest on their claims, creating a financial incentive for FTX to complete the process quickly.
The bankruptcy team is reviewing options for creditors in excluded jurisdictions. Russia, China, and Egypt are among the countries currently unable to receive payments.
Bankman-Fried, the disgraced founder, was convicted of fraud and received a 25-year prison sentence in March 2024. He was also ordered to pay $11 billion in penalties.
This bankruptcy resolution now ranks among the largest insolvency distributions ever recorded. The case has increased calls for clearer cryptocurrency regulations that protect investors while allowing for innovation.
For the crypto industry, FTX’s repayment process represents a step toward rebuilding trust. At the same time, it serves as a stark reminder of the risks associated with digital asset volatility and poor management oversight.
The post FTX to Begin $11.4 Billion Creditor Repayments on May 30 appeared first on Blockonomi.
This articles is written by : Nermeen Nabil Khear Abdelmalak
All rights reserved to : USAGOLDMIES . www.usagoldmines.com
You can Enjoy surfing our website categories and read more content in many fields you may like .
Why USAGoldMines ?
USAGoldMines is a comprehensive website offering the latest in financial, crypto, and technical news. With specialized sections for each category, it provides readers with up-to-date market insights, investment trends, and technological advancements, making it a valuable resource for investors and enthusiasts in the fast-paced financial world.