$5B of Cryptocurrency Payments Begin May 30
Insolvent crypto exchange FTX will begin paying out more than $5 billion to eligible creditors on May 30, over two years since its collapse. The FTX Recovery Trust made the announcement that the funds will be distributed within 1 to 3 working days through crypto platforms BitGo and Kraken.
The warning is the second round of pay-outs since the exchange collapsed in November 2022.
Who Will Be Paid?
Not all former customers will be paid during this stage. The payment is targeted at parties that belong to five “convenience classes” identified in the reorganization plan approved by the court. Such creditors will be paid 54% to 120% of their claim in cash.
FTX made its first payment on February 18, repaying about $1.2 billion. Other classes of creditors’ payment schedules in the future will be announced later.
Claims Based on 2022 Prices of Crypto
One of the main grievances remains: repayments are calculated based on prices of crypto towards the end of 2022—when Bitcoin was around $20,000. Today, Bitcoin has crossed $100,000, so the majority of users will feel cheated despite being paid 118% or more than their claim in fiat currency.
All creditors might be owed as much as $16 billion if all qualifying claims are filed.
Legal Consequences Draw Close to Conclusion
This payment revelation comes as related legal proceedings after the FTX collapse draw closer to their completion. Former CEO Sam Bankman-Fried now serves a 25-year conviction for fraud. Other senior managers, including Caroline Ellison and Ryan Salame, have also seen sentences handed out.
Co-founder Gary Wang and engineering director Nishad Singh received time-served sentences because they had helped authorities. Salame’s spouse, Michelle Bond, faces unconnected campaign financing charges.
